Is the Blockchain Industry a Casino?

1. Background -peter_szilagyi’s Critical Perspective on the Blockchain Industry

may succeed or fail in sending rockets to Mars, but humanity learns and progresses regardless. In contrast, the cryptocurrency industry seems more like a casino, where people rejoice when prices rise and suffer significant losses when they fall. This raises doubts about whether this industry is genuinely contributing to humanity. While it’s understandable that building a new financial system takes time, Szilagyi argues that something useful should be created in the process. He claims that the current cryptocurrency industry focuses more on value extraction rather than value creation, and that an industry which only "digs with shovels in a gold-free mine" might be better off shutting down.

2. Takeaway - Overgeneralized Criticism Can Stifle the Industry

If you didn’t know who wrote the post, it could easily be dismissed as just another strong criticism of the blockchain industry. However, the fact that this was penned by a core Ethereum developer is shocking and refreshing. It’s as if someone at the heart of what is considered the backbone of the blockchain industry, Ethereum, has dropped a bombshell by likening the space to a casino. After reading Szilagyi’s post, I couldn’t help but feel a mix of disagreement and a sense of unease, coupled with a crisis of awareness. In this context, I’d like to offer a rebuttal to his points and reflect on the direction the blockchain industry should take.

First, those who view the blockchain, crypto, and Web3 industries negatively often argue that they don’t see these industries solving any "Real Problems." However, I beg to differ. Finance, which plays a significant role in modern society, is part of the "Real World," and the problems it seeks to solve are indeed "Real Problems." I would even argue that the blockchain industry has shown remarkable promise in the digitization of finance. Particularly in areas such as the global redistribution of wealth, where traditional financial systems have failed, blockchain is making visible progress.

Source: Ultimate Guide to USDC Taxes

For example, projects like @goldfinch_fiare yielding positive outcomes through #USDC based investments in developing countries. This project, in particular, plays a crucial role in providing financial services to underserved users in regions like South America. By making it easier for businesses in these regions to access capital, it contributes to economic revitalization.

Given the vast potential of blockchain finance in areas such as digital asset integration, liquidity, and wealth redistribution, dismissing the industry as unable to solve "Real Problems" seems to be a premature and misguided critique of a nascent industry.

Now, let’s dive into Peter’s post. To get straight to the point, his comparison of the blockchain industry to a casino is misguided. There’s a clear distinction between money flowing into a place where everything is driven by probabilistic gambling and an industry where participants are driven by their own ideas and philosophies. It’s often joked that the most skilled casino players are the ones who quickly leave after winning money. However, in the blockchain industry, hopes and expectations for the realization of an ideal are held in the form of investments for a long time. I believe that money doesn’t lie. Of course, projects in the blockchain industry that operate like a casino without any ideals or philosophy should be weeded out. In this regard, the industry should focus more on internal self-regulation to ensure that capital flows into projects genuinely solving "Real Problems."

Lastly, we must not overlook the potential for discovering "Strange Value" in unexplored areas. However, just as you need to dig to find buried treasure, discovering "Strange Value" requires continued effort. This "Strange Value" is likely to manifest in two ways: through vertical research breakthroughs or through horizontal synergies with other fields.

Especially in fields where development has stagnated, breakthroughs are often achieved through horizontal synergies rather than vertical research. In 1972, physicist Freeman Dyson and mathematician Montgomery had a chance encounter where they unexpectedly discovered a deep connection between number theory and particle physics. Each expert, familiar only with their own field, found common ground in an area they knew nothing about. Their meeting is credited with opening a new path for research beyond the boundaries of mathematics and physics. Similarly, blockchain may currently feel stagnant in terms of vertical research, but by fostering communication and exchanging ideas with other industries, it could usher in a new golden age. Although horizontal synergies may not yield immediate practical results, they have the potential to open new avenues, and the blockchain industry must continue to strive in this direction.

The criticisms raised in this post aren’t entirely baseless. The blockchain industry has repeatedly been asked whether it offers solutions to "Real Problems." Questions continue to arise about what role blockchain technology and the crypto ecosystem play in our lives and what contributions they make. We may not have been able to answer these questions clearly enough, and thus, we may need to humbly accept these sharp internal criticisms. However, I believe that reducing the entire blockchain industry to a casino game obsessed with money is a mistake. While this may be a minority opinion, generalizing and dismissing an industry that has developed into a legitimate sector is not helpful in the broader context. Criticism aimed at reflection and finding the right direction is always welcome, of course.

3. Others’ Opinion

3.1 Jason Zhao from Story Protocol - “The Future of Blockchain Is Bright and There’s No Rush”

Unlike single-player tools like AI, VR, or rockets, blockchain is a multiplayer network where adoption happens gradually and then suddenly explodes. For example, no one initially wanted to send thousands of data points daily, but now we do so via the internet, the quintessential network protocol. Similarly, no one wanted to make hundreds of microtransactions daily, but thanks to stablecoins on blockchain networks, we now do. Soon, we will trade and reconfigure hundreds of programmable pieces of information, assets, and intellectual property every day. While blockchain’s future is bright, it will take some time to reach its full potential. However, considering that AI first appeared in the 1960s and only now reached mass adoption, blockchain still has plenty of time.

3.2 Jake Brukhman from CoinFund - “Contrary to Concerns, Blockchain Has Created a Lot More Than You Think”

Looking back at the blockchain industry’s journey, several significant achievements have been made:

• The world’s largest supercomputer, uncoordinated by a central entity

• Global sovereign digital money and asset rails

• The largest, lowest cost alternative to bank-facilitated wires

• A digital collectibles market that rivaled all global art sales in annual GMV

• The largest, most advanced platform for implementing real-world governance systems ever built

• Thousands of open experiments in incentive and mechanism design

• A proof of concept of zero to low counterparty risk finance

• An entire global telecom network bootstrapped by digital asset enthusiasts

• An incredible, vibrant, diverse, international industry

• A multi-trillion dollar asset class for the modern technological human

4. Resource

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• Dyson and Montgomery's fortuitous meeting over tea at Princeton

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