“Blockchain is a technology that looks for a problem.” This is a criticism that every crypto enthusiast has heard from friends who haven’t taken the red pill yet, and despite being harsh, it sometimes seems almost true.
Blockchain will change the economy in almost every way. But too many blockchain companies act like they don’t really believe in it. Instead of building a product that truly fits the market, these companies are opting to capitalize on the latest round of hype and pump their token. This short-term thinking hurts more than just the reputation of the industry.
Pushing the community to announce a launch earlier or over-promising a particular update creates problems that actually run as deep as the product code itself.
Inexperienced developers often don’t understand the extra steps required to test blockchain applications, especially when they are working to meet the unrealistically tight deadlines caused by the hype. global deficit software developers and engineers exacerbates this problem, leading to bugs that delay product launches and, in some cases, major hacks.
This is exactly what happened in the case Monox Finance, a decentralized protocol that allows users to trade digital assets with fewer requirements than on a regular exchange platform. An accounting bug was inadvertently embedded in the MonoX smart contract, which was easily exploited by hackers.
Using the same tokenIn as tokenOut (methods of exchanging the value of one token for another), the hackers were able to significantly inflate the price of the native MONO token when the tokenOut update overwrote the price update in tokenIn. The result was the loss of $31 million worth of tokens from the Ethereum and Polygon blockchains. Of course, there is no logical reason for software to allow transactions involving the exchange of the same tokens.
Consumed by the hype
The hysteria of the crypto industry is due to the lack of regulation and over-reliance on retail investors who raise funds in advance with the promise that “mass adoption” will make them rich. Every new dApp and P2E game purports to spark mainstream adoption – as long as you buy an ointment or a token. It’s a modern day “cure for all diseases” and these guys are just the latest in a long line of snake oil vendors.
Many industry marketing teams use a sales technique called “implied close”. This is the bitcoin maximalist argument for bitcoin’s astronomical predictions, suggesting that the first digital currency will one day surpass gold’s market cap or become the world’s reserve currency (which, yes, it could very well be).
Countless crypto startups are making statements like this to entice inexperienced retail investors looking to replicate the success of early Bitcoin investors, saying things like “four billion people use online payments and if we capture just 10 percent of the market, we will be huge.”
These types of projects often attract and resonate with retail investors seeking high risk, high return investments. The generated hype is pushing developers into development stages to meet deadlines and reassure investors by showing progress. This rush to launch an application or token prematurely exacerbates the error problem. This deadly combination creates a cycle in which projects need to maintain hype in order to survive.
When these projects inevitably fall short of their overly ambitious expectations, retail investors end up losing because the project was not based on reality. Venture capitalists can invest in 50 projects, expecting 45 to fail, but in the end they still make a profit thanks to the successful five. Retail investors don’t have that luxury. Therefore, it is imperative that retail investors who do not have the experience to fully review all crypto projects receive realistic and honest assessments and descriptions of the project’s business model and tokenomics. More transparency is always better – it will attract more retail investment than the promise of “huge profits”.
It’s usually not real malevolence, but inexperience, lack of business leadership, and pressure to make quick profits that make retail investors feel like dumbasses.
The problem with blockchain is not the technology itself, but the opportunism of some companies in the industry. Only through due diligence and a more realistic approach in the development process can the industry accelerate its maturation process and show the true nature of the blockchain and the benefits of the decentralized Internet.
When this happens, we can talk about the blockchain as a “solution looking for a problem”.
Credit : cryptoslate.com