New technology VS new application, which one does the current market need more?

Original title: "GG"

Original author: Matti

Original translation: Lucy, BlockBeats

Editor's note:

At present, new technologies and infrastructures are constantly emerging in the cryptocurrency industry, but many developers are more concerned about how to attract venture capital rather than directly solving problems for users. Matti pointed out that the cryptocurrency field should prioritize simplifying technical complexity and launching more practical and useful application scenarios to attract more users, taking Shopify as an example.

Matti believes that the complexity of technology and immature infrastructure have hindered the adoption of mainstream users. Despite a large amount of capital investment, many projects lack practical consumer-oriented use cases. At the same time, the premature involvement of institutions and traditional finance may bring risks and further exacerbate the speculation of the market. BlockBeats will translate the original text as follows:

In this article, I will explore whether more infrastructure is needed to attract more crypto users, and the final conclusion is that we may actually need less technology. At the same time, the technical narrative is actually capturing more value. In the pursuit of this accessible value, we have entered the era of crypto entertainment, and everyone, including institutions, wants to get in on the action.

Are you tired of hearing about the emerging infrastructure that keeps getting funded? Is the complexity of crypto technology really holding it back from mainstream adoption? Or are we just delaying answering the really tough questions?

I saw a video where the founder of Shopify said that the venture capitalists who missed out on investing in his company claimed that the total market (TAM) was too small. At the time, they counted about 50,000 online stores. Now, Shopify alone has 1 million merchants.

Shopify created a new market by solving the technical difficulties of creating an online store. So for the on-chain economy, do we need more use cases to attract users, or do we need better technology? Or is technology speculation itself a use case?

Are developers the product?

Right now, more developers are building products for other developers than for actual users. It’s easier to optimize for VC, the more obscure your product is, the more reflexive your tokens are. Right now, we have more technology than real applications.

To reiterate the above, one of the following must be true (at least):

· We need better technology to remove barriers to adoption

· Technology is not important, build products for users first, then build infrastructure (see Amazon/AWS)

· Technology is the product, and venture capitalists are consumers and sponsors of casinos

By analogizing Shopify’s success story to today’s on-chain usage, we can argue that the lack of useful applications is due to technical barriers. Shopify created a new market, so there was no actual total market (TAM) before.

If this is correct, I think we need to simplify the complexity of technology, not increase infrastructure.That is, the answer should be less technology, not more technology. At the same time, we need better use cases beyond speculation to attract more funding.

The case for less technology

Blockchains are inherently complex by design. They are based on redundancy, liberating state retention from closed databases. Blockspace is the vehicle for updating state, and its production is not easy and comes with complexity and cost. After all, there is no such thing as a free lunch.

Developers and entrepreneurs have proposed various forms of chain abstraction schemes. These schemes are designed to make it easier for people to interact with blockchains, such as conveniently bundling wallets, enabling cross-chain bridges, and deploying applications more quickly and cheaply. In a sense, they act as intermediaries between blockspace and users.

From a macro perspective, chain abstraction is about bundling blockspace with developer tools and composable infrastructure, and then providing it to users. But are we likely to move back to centralization through these over-engineered solutions? Does this mean that we will eventually end up with a complex multi-signature scheme as the "Amazon Web Services (AWS)" of Web3?

If you don't think abstraction is the solution, but you are still a supporter of technology first, then you may be looking for the next ZK or FHE miracle that can scale and verify proofs so that our ordinary neighbors can also use blockchain. Therefore, the solutions to technology friction today can be summarized as:

· Less technology: simplifying complexity (compromise)

· More technology: scaling and bridging (faster, cheaper, seamless transactions)

This means that to attract the next 500 million users, we need blockchains that are scalable and interoperable, and simpler ways for users and developers to interact.

Developers keep promoting wallets and universal apps, claiming that better UX is a means to attract new users to the crypto space or to steal market share from Metamask. Crypto doesn’t need a better UX for users — it needs new use cases. Give people more interesting or useful things to do.

Coming up with new use cases is much harder than copying what already exists and tweaking it to make it look original. Many apps are built based on “shoulds” — “users should want to own their data or use governance” and “Twitter shouldn’t have so much power” — rather than actual needs.

So I don’t think the problem is the technology, but the lack of imagination in the use cases. We need new applications right now. Given that there is more money in crypto than ideas with good execution, we end up in a crypto cycle binge.

The Professionalization of Lollapalooza

When you don’t know what to build, you build more technology. When you don’t know how to spend money, you do financial manipulation. When you’re bored, you browse memes online. Cryptocurrency encompasses all of this in one escapist movement.

Cryptocurrency is currently in a macro cycle that I call “Decreasing Entropy”. This can be summarized as “Speculation is the Wedge”. Speculation is eating cryptocurrencies, and cryptocurrencies are eating speculation. I think the past and future can be divided into the following macro cycles: · 2009-2014 Cypherpunk Movement (Origins) · 2014-2020 Entrepreneurialization of Cryptocurrency (Entropy Increase) · 2020-2025 Crypto Entertainment (Entropy Decrease) · 2025 onwards Deployment Phase (Negative Entropy)??? Currently, the entire industry is caught in two extremes: dystopian memes with no intrinsic value and utopian promises of technology that do not solve current problems. No one is focusing on answering the hard questions (use cases). This is the true portrayal of entropy reduction: Do you want to make money or do it right?

At the end of the cycle, midcurvers may be right again, but this may also mean that they neither make money nor lose money. Cryptocurrency becomes a reality of betting on the future; everyone is both a tech investor and a meme investor, and everyone can participate in the zeitgeist because there are no barriers to entry.

Both left and right continue to play this pretend game because it is profitable (midcurvers will eventually get sucked in as well, as they become liquidity at the exit). The rules of the game are simple. Sell the tokens to anyone who will buy them. What’s wrong with that? A lack of fundamentals?

This may sound like “so what-the-ism”, but how do we anchor it to reality when the economy itself relies on a kind of alchemy that few can justify without relying on performative economics? One could argue that the $400 billion global consulting market is also a joke, but because it is so established, it is hard to stop playing this particular pretend game.

In fact, the market has largely become an entertainment industry, such is the impact of 24-hour streaming information on society. Cryptocurrency has found a good product-market fit in this era of peak performance, where we are blurring the line between games and reality.

C'est la vie (that's life). This is not a prescriptive analysis; I'm not saying it's bad. I'm just pointing out how the financial game has evolved. This evolution makes some things that seem worthless likely to become priceless in the future (and most will become worthless again).

In this day and age, following the money means following the trend of Lollapalooza. If you can play this game - congratulations, you have the skills to sell faster than the influencer. But in my opinion, cryptocurrency at present is mainly an entertainment industry, and we are in the business of token sales.

I don't think this is the final form of cryptocurrency. I suspect a big bust — a real disillusionment — is still ahead. The crypto equivalent of the dot-com bubble has yet to happen. Why do I think so?

· Most projects that get funded are tech for tech’s sake

· Blockchain has yet to scale to meet mainstream demand

· Very few consumer-facing use cases

· Institutional involvement and traditional finance adoption will be premature and ultimately foolish money

Whatever you think, we are not ready or worthy to meaningfully absorb the trillions of institutional inflows that are my final puzzle piece. If inflows occur via ETF approval, we will have the final degen kingpins entering the final leg of the macro cycle that began in 2020.

At a high level, the success of cryptocurrencies is simply dependent on bringing more money into the game. In the short term, its success could become a self-fulfilling prophecy, with financial depravity igniting the very system cryptocurrencies are trying to replace. In the long term…

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