Controversy over the value of the crypto industry: Did we choose the wrong industry?

Original title: "Sunday Recommended Reading | Ethereum Core Developer Reflects: Doubts about Entering the Wrong Industry"

Original Compilation: Wu Says Blockchain

Ethereum core developer Péter Szilágyi is a member of the Ethereum Foundation and the developer of Geth, the most mainstream Ethereum execution layer client. On the evening of August 5, after witnessing the community's drastic emotional fluctuations in the face of drastic market fluctuations, Ethereum core developer Péter Szilágyi tweeted that he doubted whether he had chosen the wrong industry, revealing his deep disappointment in the crypto industry, which triggered widespread discussion.

The following is Wu's compilation of the original text and the corresponding key comments:

"I often wonder if I'm in the wrong industry. Take SpaceX as an example: if they succeed in sending the rocket to Mars, it's progress for mankind; if they fail and the rocket explodes, mankind can learn lessons and improve; all results promote progress. In contrast, the crypto field is like a casino for fools (apologies to the few). If the market goes up, they clamor about when they will buy a sports car; if the market goes down, it directly affects or even destroys life; what contribution is there to mankind? Yes, it takes time to build a new monetary system. That's right... but can we do something useful by the way?

Everyone is focused on becoming the next V (probably referring to Vitalik), but no one wants to do anything useful, everyone is pursuing value extraction. I really don't see why this system shouldn't collapse? In the big picture, what will we lose? All crypto has done is a huge value transfer, but so far I don't see any value creation. Please note that getting rich through luck and then transferring funds to some non-crypto projects is not a success story in crypto. At most, it is a success story of a charitable lucky person, but it is more likely that this person is making simple diversified investments.

In my opinion, it's time for this industry to create something truly useful that people are willing to use, otherwise it's time to close down. At least Bitcoin tried (although failed) to be a safe haven asset. But all other projects are like merchants selling shovels, they don't really create anything valuable. Just like in the gold rush, the people selling shovels don't care whether there is gold to dig, they just want to make a profit. The reality is that these projects do not provide any real innovation or actual value, but are just pursuing short-term interests and speculative opportunities. "

On the evening of August 6, Péter Szilágyi Tweet again:

"My complaints about Ethereum/cryptocurrencies are not to denigrate them, but to maintain realistic expectations. Our most important task is to keep those who have invested their savings into this world from getting hurt. Everything else is secondary. Promising everything but failing to deliver will lead to bloodshed in the streets. The same is true for persuading people to get into something they don't understand the risks. Be honest and admit what works and what doesn't, what has been done and what hasn't. Emphasize the risks of each part, including the parts of the future that may never be realized.

I will always oppose creating a frenzy because I don't want to see ordinary people being ruined by some billionaire venture capitalists who don't care about your existence. Yes, I may always be in the minority. Yes, this may cost me most of the potential gains of cryptocurrency. I think fairness is more important than financial gains."

Comments and replies

Stablecoins and Defi need to be affirmed

Founder and former CEO of Shapeshift, a decentralized cryptocurrency trading platform Commented: "Stablecoins, Defi lending (such as Aave or Compound), decentralized exchanges (DEX), privacy coins, many excellent wallet applications, excellent financial intelligence systems such as Dune or Messari, high-throughput blockchains, there are indeed many great inventions in the crypto field. You may be confused by the casino-like speculation, but you should see the real value through the appearance." Péter Szilágyi In response to this:

"I'm by no means saying that nothing of value is being created. But I think speculative factors are too dominant, and we seem to like this phenomenon because it brings money. For the examples you listed:

Stablecoins, I accept. Borrowing requires collateral, so you need wealth on the chain to get it, and to me, this is not real empowerment.

Decentralized exchanges: Well, this one falls directly into the casino category in my opinion. If we had a lot of strong currencies and people really wanted to exchange them, DEX would have been an indispensable tool. But at present, it is more about trading, and it doesn't make sense for me right now.

Privacy coins: They are not that common, and we may see suppression against them (such as tornado, etc.). I would be happy to see their development and acceptance.

Wallets: It is just an auxiliary tool for the rest, but it is not a use case in itself.

Dune/Messari: Well, you can analyze the casino situation, but that doesn't make it any less of a casino, but I'd love to be proven wrong.

High TPS: Yes, we've reached that point, but what do we do with it? I'm using my shovel metaphor to make this point. Hopefully, it can be put to some practical use, rather than releasing 1,000 meme coins. I'm sure there are a lot of great things being built. But didn't we make our namesakes out of MEME coins and Lamborghini sports cars? "

Transparent Financial System

Crypto KOL @iamDCinvestor commented: "Transparent on-chain settlement is actually a great value-added for humanity."

Péter Szilágyi replied: "What impact does this have on the 99.999% of the world who don't have money to gamble?"

@iamDCinvestor replied: "99.999% of people don't need to use it directly to benefit. A more transparent financial system will benefit everyone because it will reduce behind-the-scenes shenanigans and opacity, lower costs, and more trust. These values may be difficult to see if you only focus on degens being liquidated, but this is important and has the ability to change the world, I really believe it."

Péter Szilágyi: "Of course, I fully accept this. But if we call it the "World Computer" or something similar, shouldn't we build something more directly relevant to ordinary people? ”

@iamDCinvestor: "I agree, we need other applications, on a larger scale in other areas, I think we will achieve this huge value settlement layer, which is a good start, but there will be more things to happen, I still think that smart contract wallet identity, non-monetary digital assets, and other forms of currency will all be very important in the future, but at the same time, booms and busts will not disappear. Human greed is still too strong, and the systems that are being built are really important for the future, and your work is also important."

@0xemon commented: "You should spend more time in emerging markets than in the West. Many people rely on stablecoins and DeFi infrastructure to improve their economic conditions. The problem is that most people don't want to talk about their financial decisions publicly, so you only hear stories about Lamborghini."

How to educate and encourage more emerging market investors and users

Péter Szilágyi: "Stablecoins may have value. However, if you need to rely on cryptocurrencies for economic reasons, then you are really all these DeFi The target audience of the protocol?"

@0xemon: “Probably not, which is why I think we need to encourage more developers and investors from emerging markets. Supporting entrepreneurs in developed markets doesn’t really help the target users at the bottom of the pyramid. I know a lot of people who use stablecoins because they live in countries with capital controls and can earn a yield on their stablecoins. They also use it as a form of compensation. Anything that improves economic well-being is a big benefit to users.

Unfortunately, casinos take up so much of the market that we often overlook the other benefits. However, at the same time, access to casinos also means access to a lot of liquidity, which people living in emerging markets don’t have access to. Crypto is a step-up fintech for people in emerging markets. We just haven’t done enough to highlight its unique use cases and support local developers. We’ve been in the decentralized finance space for years, but no VC has tried to invest in permissionless on-chain microfinance loans. Imagine if more VCs were located in developing countries…”

@nicnode commented: “Look at how crypto is being used in Latin America and other emerging markets — literally saving many lives. Bolivia is going through a huge crisis right now, and the only refuge people have to ensure they can access their savings is crypto.”

Péter Szilágyi: “But they won’t use DeFi protocols, nor will they use Uniswap or NFTs.”

@nicnode: “Yes, they will in the future (some already do), but education (and simple translation) still has a long way to go. In Latin America, most banks offer predatory lending rates, DeFi solves this problem.”

@vladlykhonis commented: “Funding aspect. Although unfortunately, no one funds anything “useful.”

Péter Szilágyi: “I thought about this aspect in contrast to the stock market. I agree that this part is necessary for “efficient capital allocation”, but the stock market is the opposite: you have companies building utility, and the stock market funds them. Cryptocurrency seems to be the opposite: we have a super efficient way to distribute money, but no utility to distribute it. 」

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