The recent bear market in cryptocurrency and the falling tide of digital collections in the country have brought worries to people’s vision of Web3.0. Between speculation and long-termism, then, how exactly to look at the current crypto industry?NFT, Metaverse, Blockchain, Web3.0 …… Every time these concepts of blockchain and cryptocurrencies have appeared in the past two years, they have been the focus of heated debates. The crypto space is growing by leaps and bounds, with a sea of new projects, terms, and concepts changing hands before the popularization of the science is deep enough. In this context, it is more important to look at the crypto industry from a different perspective than acquiring new information that may never be learned.
For a wide range of people, both inside and outside the industry, except for a very small number of “builders” (the “cryptosphere” term for people who are trying to do something real), it is important to understand the following Top-down methodology and logic may be more practical than bottom-up extrapolation from scattered individual “flashpoints”. A clearer and more practical understanding of the current state of the crypto industry is both a way to “dispel the myths” and “de-demonize” the industry.
In 2010, when Satoshi Nakamoto had just deployed the blockchain and Bitcoin, an email was sent to someone who offered to pay 10,000 Bitcoins (which at the time amounted to $41) for two pizzas. This was the first time Bitcoin had been used as a currency-like medium of exchange in the 16 months since it was invented; thus, the crypto world began.12 In the past 12 years, the crypto industry has gone through several bull and bear cycles. Last March, Beeple’s Every Day: The First 5,000 Days NFT artwork sold for nearly $69 million, creating a “broken circle effect” for the most recent bull market. Within a year, NFT and the meta-universe were not only well known, they were the next big thing, with Bitcoin peaking at $64,400. Today, after all the recent market crashes, Bitcoin is now trading at $24,461, which is back to pre-bull market levels.
Now that the crypto industry has entered a bear market, the mainstream view is that the crypto industry is either being held hostage by pessimism, or is still caught up in the debate over what is decentralized, what is a metaverse, and other definitions. It is not difficult to realize that the crypto industry follows the same development pattern and cycle of the general industry, and there are many similarities with the rise and fall of Apple, Yahoo, and Facebook (Meta) during the rise of the Internet at the beginning of the 21st century. What is more worth discussing than the market sentiment swayed by the price is how we should look at the “changes and constants” brought by the crypto industry.
Taking the NFT sector as an example, it is more important to understand the driving forces behind the NFT sector than to analyze what project will be the next to explode in popularity, or whether the value of NFTs will go to zero or not. The key to the popularity of “IP” NFT avatars is still the know-how of marketing and advertising communications. This kind of NFT is not so much a new model of “Fly to the moon” (a common saying in the circle, meaning that NFT prices are skyrocketing), but rather a way of tapping into the “residual value” that has not yet been realized in the existing social network and Internet economy, which is still the “residual value”. “It is still “old wine in a new bottle”. In recent years, “the world has been suffering from a lack of IP for a long time”, and there are few new “phenomenal” IP innovations, while Hollywood movies of the last century, such as Star Wars, and the “collective memories” of the people of China, such as Jin Yong’s martial arts and Journey to the West, are constantly coming out with sequels. “The concept of NFT has filled this gap in time, and the meta-universe has maximized the activation of the original application scenarios of “cultural and creative consumption”. Especially for avatar-type NFT and game-type NFT, the former’s “flaunting attribute” relies heavily on existing “Web2.0” social network platforms, such as Twitter, Instagram, etc.; while the value of the latter is more reflected in the realization of game assets. The value of the latter is more reflected in the realization of game assets.
The so-called “empowerment” is, to a certain extent, the cart before the horse brought about by the over-financialization of NFTs and the detachment of their practical functions from their value anchors. As a tool for digital authentication and pass-through certificates, NFT can permanently mark the ownership of digital assets and transactions. For digital content creators, it is undoubtedly the best means to mark original intellectual property. More and more online and offline organizations are using NFT technology to manage and operate member pass systems to record members’ transaction records, attend events and allocate corresponding rights and interests; although there is a one-time system adaptation and learning cost at the initial stage, the long-term benefits are far greater than maintaining the existing electronic management mode, and it is also a means of publicity.
On the other hand, just like speculative behavior in the crypto market, there are two sides to “value anchoring”. Throughout the current bull market, the less value-anchored NFTs are, the more they have realized the greatest gains and gains, as their upper limits are difficult to predict by reference standards. On the contrary, whether the value is focused on utility, artistry, or tied to personal IPs such as celebrities, etc., the price of NFTs is framed to a certain extent, as in the case of the traditional stock market’s company valuation model. Even though the early development and dividend period of all industries cannot be separated from the rapid expansion and “broken circle effect” brought about by speculative behavior, speculation itself is an essential part of the process of establishing an ecosystem under the regulation of a healthy and free market, and for individual investors, speculation and investment in the crypto field have a strong first-hand advantage and a relatively high threshold. relatively high threshold. The halo of the bull market also makes it extremely easy to ignore the high risks behind the high returns. In fact, the trend of cryptocurrencies and the stock market correlation is extremely high, if the diversification of investment or hedge mentality to participate in the macroeconomic recession is expected to find the original diversification of the portfolio at the same time the plunge is inevitable. Before collecting NFTs on a whim, it is worthwhile to think twice about your expectations of return, your tolerance for risk, and the purpose of your collection. If it’s to make a profit, you need to carefully examine where you are in the “drum roll” process; what size gain you are realizing for the seller with your purchase, and if you need to “cash out,” where and when the next group of collectors is expected to show up. If it is for long-term holding, how to ensure long-term asset security, and whether the moment of purchase is the best time to consider.
For the rest of the current crypto landscape, there is a similar phenomenon to NFT – they are neither panaceas to solve existing problems promoted by “techno-fundamentalism”, nor pure speculative bubbles whose value is entirely dependent on market price, nor “Ponzi schemes” where a few negative events negate all paradigm innovations.
For example, the decentralized Web 3.0 aims to break the monopoly of user data and content by a few large corporations in the existing Internet (Web 2.0), and tries to implement a “creator economy”, so that content producers can earn revenue directly and no longer depend on the platform. While this is an ideal solution for content creators who are drowning in big data algorithms and information flow, it still requires a realistic scaling solution in the midst of the attention economy model (where only 10% of content gets more than 90% of the attention) and the naturally centralized nature of advertising revenue; it is also a different approach from the existing subscription model, which is not the same for consumers. “The difference to the existing subscription model for consumers is not significant, and the latter is even easier and faster to use.
As for the rise of DAOs (decentralized autonomous organizations), most of the management and organization models are still similar to corporate governance, crowdfunding schemes, or hobby communities; very few of them actually require the application of fully encrypted organizational tools, and the ones that can achieve sustainable benefits are even rarer. The same is true for the current hot topic of de-fi (decentralized finance), which is still heavily dependent on existing financial market models for liquidity, lending and valuation.
However, these challenges do not mean that crypto innovations such as NFT, Web 3.0, De-fi, DAO, etc. are just “repackaging” of existing models. The core concepts of blockchain, such as decentralization and community consensus, have already been unknowingly updating the public’s awareness, just like enlightenment; and with each passing day, they will sooner or later be put into practice and penetrate into everyone’s daily life.
Behind the massive dissemination of “NFT Small Pictures”, CC0’s open copyright proposition: “unique ownership, open access” has been truly realized and applied, and in the BAYC project, collectors have full commercial copyright. The development of commercial projects around it, whether it is a cafe in California, a flash limited apparel series with Li Ning, or a cooperation with Greenland Group, are all based on the purchases of the collector, without the need to obtain the cooperation license of Disney images, which is generally cumbersome and centralized. The collectors of CC0 Music NFT can not only directly authorize music adaptations, but also directly obtain royalty income through smart contracts in short video applications, and even more so, due to the characteristics of “public access”, music clips can be widely disseminated to achieve a win-win situation for the participants of the project.
The cornerstones that remain after the tide fades must reflect a consensus that transcends the debate over the definition and characterization of value. Even in today’s bear market, the framework of the industry that has been established continues to operate; ideas that have been altered have begun to take root. in the second quarter of 2022, according to incomplete statistics, the global crypto industry made more than 500 investment and financing deals totaling $12.7 billion, which is a 22% drop from the previous quarter, but still significant in its own right in terms of numerical size. A significant number of these investments are focused on the front-end technology and business prospects of the blockchain industry, such as infrastructure and “tool providers”.
For first-time NFT collectors and first-time meta-universe travelers, their first foray into the crypto-world must be characterized by a huge gap in the use of software that is already available in the real world. Almost all decentralized applications and crypto platforms are not as easy to use and user-friendly as mainstream Internet platforms that have already matured; the processes of wallet registration, exchange and purchase are cumbersome, time-consuming, and costly, and there is no centralized security mechanism, and the price for this high degree of freedom is that everyone needs to be responsible for the security of their information and assets. The infrastructure solutions proposed to address the above phenomena are the key to transcending the bulls and bears and helping the crypto industry to connect with real economic production activities as soon as possible.
According to expectations, Ether will be upgraded and merged in late September, changing the original less efficient, more energy-consuming and widely criticized PoW (proof of workload) “mining” model to a PoS (proof of stake consensus) model; the latter is more energy-efficient and efficient, and can process up to 200 times more information transactions per second than the former. The latter is more energy efficient and can process 200 times more information transactions per second than the former. There are also exciting technological advances in capacity expansion based on the second tier of Ethernet, where transfer and transaction fees can be as low as 2.57% of the on-chain cost using zero-knowledge proofs, a cryptographic technique that is the “optimal solution” between security and efficiency. High “gas fees” and “gas wars” will be a thing of the past. Multi-chain and cross-chain protocols are also one of the hot technological advances, which allow interaction, integration and optimization of resources in different blockchain ecosystems, providing a unified interface that greatly facilitates the use of users.
For the crypto industry, which is still in the early growth stage of the industry lifecycle, its expansion undoubtedly relies on the growth and scaling of a large number of new participants. As such, solving the problem of how new users can “seamlessly” transition from traditional consumer scenarios to the crypto space is just as important as building the technology infrastructure. Service providers in this capacity are also realizing the most robust revenue growth in their existing markets. For example, Tiffany’s CryptoPunk-affiliated NFT called NFTiff, which is backed by the Chain, a technology platform that supports the physical jewelry program, has avoided the risk of NFTiff going bust, even though it did not directly benefit from the rise in CryptoPunk’s floor price associated with it. Nowadays, Gucci, Nike, LV, etc. have entered NFT, regardless of their purpose and revenue expectations, for these luxury and consumer brands, it is the most cost-effective way to seek to B (enterprise-facing) technology providers. The same business logic holds true in the to C (consumer) space. For example, Async Art offers packaged tools for creators of music and visual art that allow artists with no programming skills to publish programmable NFTs with a single click, and today, proponents of similar No-Code tools are seen not only as the most important means of bringing in new users, but also as a bridge to an ideal vision of complete productivity and creative freedom.
More important than the market sentiment of cryptocurrencies and where the waters of reality lie is how we interpret reality. Before blockchain technology finally penetrates into daily life and economic production like the Internet, it is bound to go through several fluctuations, iterations and even worse – but in any case, as the original name “blockchain” implies, blockchain is not only a technology, but also the permanent records on the chain. But in any case, as the original name “Blockchain” implies, and as the permanent records on the chain, blockchain has already brought far-reaching and irrevocable changes to society, paving the way for the future of mankind, brick by brick.