The majority of people criticizing crypto lack basic knowledge crypto. They are:
- Repeating thoughtlessly opinion of journalists (or others “experts”)
- and/or reacting emotionally to the recent events.
In this article, I’ll share my opinion about the crypto space by going through the different critics.
As I have a web2 background (web development, and pen-testing), and a web3. (dev and smart contract security) I can be more objective about the critics and unravel the truth.
Who criticize the blockchain ?
They are several communities/websites criticizing the crypto space
- “Web3 is going great” (reaction to bad events in the crypto space)
- The “buttcoin” Reddit (more moking crypto/than criticising it with good points)
- Several other online forums and personalities.
I advise you to go though their critics in order to understand their point of view, it’s very important.
The main critics of Crypto and Responses
1. “Crypto is not scalable”
As of today in 2023, this is true, crypto is not scalable. (unless you sacrifice, the decentralization or the security which is, of course, not an option)
7–20 transactions per second on Bitcoin and Ethereum is far from being acceptable.
Moreover, as of today, L1 blockchains scaling solutions, like Solana failed to deliver they promise of a stable & secure & scalable blockchain.
But there are 2 proven (and already working at a some extent) solutions to the scaling problem (so it’s not just a “false promise”) :
- Implementation of Sharding to multiply the TPS on the Ethereum blockchain. (scheduled to the end of 2023)
- L2 scaling solutions like Starkware and Optimistic rollups.
They may be implemented in the near future and bring crypto to beyond 10s thousands of transactions per second.
2. “Crypto is useless in the real life”
“Crypto is a solution in a search of a problem”
“Crypto is only useful inside crypto, no normal business use crypto”
It’s true that a lot of web3 DApps were either “over-hyped” (NFT, shitcoins, weird DEFI protocols) or can easily be done in web2. (without the need for decentralization)
But there are still significant use cases.
Here are some of crypto/web3 possible use cases (Impossible or significantly harder to build using web2)
- Easier payments, for instance you don’t need a bank account for using money, you just need to generate a public/private key pair. This is useful in remote countries (Africa/south America) where people don’t posses bank accounts.
- Crypto accelerated the development of ZK-knowlege and others cryptographic protocols which may benefit not only the crypto world but the web2 industry.
- Automation of a lot of tasks when an intermediary is necessary. (escrow contracts, insurances…) This will free a lot of jobs
- Unfalsifiable certificates/identities/digital ownership between several entities in the world.
- Blockchain can help build are more accurate and transparent supply chain. (Some company are already on it)
This is a small fraction of possible use cases of blockchain, although it’s not revolutionary, there is more than enough to improve the world beyond simple speculation.
3. “Crypto is not really decentralized” (or even more centralized than institutions)
In Ethereum, only 5 entities control more than half of the Ethereum stake.
Moreover, 50% of Ethereum nodes are OFAC compliant (as September 2022), meaning that they comply with the US sanctions. (by freezing wallets and blocking transactions to curtains smart contracts like tornado cash)
Unfortunately, this is enough to argue that Ethereum is not really decentralized and probably won’t be for a long time.
In case of others L1 chains :
- Bitcoin is still censorship resistant despite some miners trying to censor transactions.
- BSC is of course centralized.
- Solana don’t do much better than Ethereum due to the lower number of nodes and too high token allocation for insiders.
- Monero, the privacy friendly coin possesses too a very high centralization of miners. (even more than ETH)
In most of smart contracts, you have an
owner which possesses a lot of privileges compared to standard users. (pause, blacklist, mint….) Of this don’t help the decentralization, and I don’t need to explain why.
So this point is quite true, crypto is not as decentralized as planned. BUT
The activity in the blockchain is 100% transparent, and transparency is a form a decentralization, as any one can see what is happening (contrary to traditional institutions)
Moreover, the blockchain is still far less censored than traditional banks and institutions as there are it’s economically inefficient.
4. “Most of crypto industry are only scams” (like NFT…, SHITCOINs)
Currently this is true, let’s be honest guys, most of people in crypto are here only for the sake of money and don’t give a shit about the rest.
Although there are some real-life application described above, a lot of them struggle to thrive.
Most of the industry is infested by scams/rugs/hacks… , as of today storing money on a bank account or in a broker is way more secure than storing money on a smart contract.
The good news is that the technology start to be mature
1–2 year a go, you could easily make shitcoins/NFT and become a “millionaire” by scamming people, now this is almost impossible.
As a result, I don’t foresee a lot scams coming for 2023 as most of people are now aware of these scams.
Only, “value added” projects will survive the crypto winter, and the next bull run may be “more serious”, note that this is just a prediction, it may end-up way more differently.
5. “Crypto is very inefficient and bad for the environment”
- This the case for only PoW currencies which require a lot of energy, they represent only 3 out of the top 20 most capitalized crypto. (Top1: Bitcoin, Top9: Dogecoin, Top:13 LiteCoin)
So this is true for only a limited share of crypto currencies, all new blockchains don’t use this model and are more energy efficient.
6. We are not early, crypto should already be mature.
Bitcoin was born in the beginning of 2009, and as of 2023 Crypto signed his 14th birthday, today it’s regularly used by 10–300 million users (depending on the estimation and the frequency, source: Cryptocurrency users worldwide 2016–2022 | Statista)
If you compare it to the internet (born in 1991), 14 years later in 2005 internet was used by 1 billion people (source: https://ourworldindata.org/internet)
So yes, this is true internet is a “more” revolutionary technology than crypto.
But it’s NOT a 100% fair comparison.
In fact, Internet was born on the 1960th…. (the ARPANET project) and a lot of protocols you use everyday were created before the 1990…
- like TCP, in 1973 (https://en.wikipedia.org/wiki/Transmission_Control_Protocol)
- IP, in the 70s (https://en.wikipedia.org/wiki/Internet_Protocol)
- OSI model in the 70–80s (https://en.wikipedia.org/wiki/OSI_model)
- and may more…
Although crypto is quite old, The argument of “we’re not early anymore” is false.
It’s more fair to compare the beginning of the internet with the beginning of “web3” when Ethereum was created in mid-2015, 7.5 years a go (as of 2021.
Conclusion, is crypto really dead ?
In my opinion, the answer is NO.
The crypto community is still very strong and new technological advances are coming to gradually improve most of the crypto drawbacks. (although unfortunately they are very slow to implement.)
How will be the future of the crypto industry ?
Here is how I see the future of the industry in the next 5/10/20 years:
- The crypto will mature, the prices will be less volatile. And they will be no more scams than today in web2.
- Fast improvement in cryptography will improve the blockchain (or even create new types of “blockchain”) and help it to scale/reduce the fees.
- Integration of blockchain is some aspects of real life.
This was my opinion about the crypto space, If you have, an opinion too, let’s share it in the comments of this article!