Cryptoeconomics is nothing new. And like any innovation, it still arouses different feelings.
It is necessary to separate emotions from reality. This boils down to the following:
-Blockchain-based products and services are reality and future. But we need to be skeptics and not mere evangelists; -There are frauds and dubious business in this sector. But there are also serious companies, concerned about their customers and about complying with the law — these are the ones we need to encourage. -Fashions and buzzwords (like web3 and metaverse) are important. They increase interest and encourage entrepreneurship. But can’t confuse more than explain.
Blockchain Technologies and Imaginaries
Blockchain is still a technology under construction.
In the history of innovation, everything usually starts with more abstract concepts (e = mc2). Then comes applied research (nuclear research). After trials and failures, products and services (plants) arrive. The internet was like that. Concepts and protocols conceived in the 1960s and 1970s. Network applications from the late 1970s. The commercial internet only in the mid-1990s.
But the world doesn’t work like that anymore, so slowly and linearly.
Today’s innovation is decentralized. They are ecosystems in which the market, academia and public sector act at the same time. So it is normal for products and services under construction to be placed on the market. Blockchain is not quite ready, but it needs to be put on the market. The best test is always who consumes.
In fact, trial and error in entrepreneurship is something sensational. As a result, products and services reach the market faster. Remember the first iPhone? So it’s only been 15 years.
Source. Linkedin With new technologies, narratives of enthusiasm and optimism also emerge. Innovation is always heralded as a way to change the world.
Think about how steam engines enabled factories and new products to emerge. And how all this catalyzed the industrial revolution, the thinking of modernity. In fact, they even created fantasies and science fiction — have you ever heard of steampunks? And Around the World in 80 Days?
The enthusiasm and optimism with blockchain is there. But one should not believe in fantasies.
Narratives emerge faster with decentralized ecosystems and social media. And they also evaporate faster. Just remember the cyberspace free of human laws in the 1990s. And the springs built by social networks in the early 2010s. Imaginaries built by the market are important. They fulfill economic functions and even motivate public policies. But they don’t create fantasies.
This posture may even seem traditional and old-fashioned. “My grandfather said the same thing about the internet.” But there are good examples where being more rational about cryptoeconomics might make more sense.
Cryptocurrencies Replacing Traditional Currencies and Central Banks Seems Naive. At least today. Not admitting speculation problems in this market seems like the attitude of the Three Wise Monkeys.
All this does not dampen optimism about blockchain technology.
We still haven’t explored even a fraction of its potential. There are amazing applications being tested. Companies investing a lot in R&D. Concepts we haven’t even imagined yet. The future scenario is indeed positive.
The Bad Apples of Cryptoeconomics
Every week, scandals and denunciations related to crypto-economy arise. There are even sites that map all these negative news. But let’s stop to think about how newspapers have worked since they appeared. More critical and negative news tend to occupy more often the headlines of newspapers and portals. They also occupy the first block of video programs. It’s normal, right? That is the function of the media. Be critical and denounce what goes wrong in society and the market. But that doesn’t mean that there aren’t many, many serious people working in this market. Of course, even the venture capital industry makes mistakes. After all, they are activities based on uncertainty. If it weren’t for that, there wouldn’t even be the Great Navigations, let alone venture capital!
There are countless examples of companies doing very well, thank you. They even try to influence the sector and the government to create good practices, self-regulation rules and even new legislation. This can provide greater legal certainty and remove opportunists from the market, which do not contribute to the image of the sector. Fashions and concept words to publicize new trends is an old (and efficient) marketing strategy. It’s legit, it’s part of the game. Helps to raise awareness of audiences. Motivates consumers and consumers. More importantly, it encourages people to undertake. They are the wild, nonconformist spirits who see a new trend. The opportunity to create something and transform communities.
The risk of these strategies is to oversimplify complex things and confuse the public.
The research works with concrete and tested information. Marketing is about persuasion. If campaigns are designed to facilitate difficult concepts, great. But when thatdeviates from initial purposes and confuses more than helpsis not nice.
Metaverse, for example, is an expression that helped the public a lot. It helps to understand how virtual environments work (something that is not new) and their future potential. Which, by the way, is now much bigger because of more stable VR equipment and 5G connections.
At the same time, this expression in the singular instead of the plural confuses. There is not a single metaverse controlled by a company. There are metaverses: virtual games, social networks in a virtual environment or even initiatives decentralized by blockchain. Incidentally, using the hype of metaverses to link them with blockchain technologies (as if they were the only path to the true metaverse) is also pushing the envelope.
Web3 is already something more confusing, and has been of little help to the market.
It was created to bring together all initiatives that use blockchain, and present them as (very) transformative for society. But this expression oversimplifies a diverse sector. By using the number 3, it also gives the false impression that it means a new era for the internet — What is not true. Blockchain, as well as social networks (referred to as Web 2.0) and the world wide web (the Web 1.0) do not change any technical foundation of the internet — still TCP/IP, universal access, interoperable private networks. Decision decentralization, the main argument of those who defend this concept of Web3, seems more like a persuasive argument than something proved (or provable). The technology isn’t even quite ready for that.
Blockchain is not (nor was it created for) a change in the political economy of the internet. The market still works on the logic of innovation entrepreneurship. Create products, destroy old technologies, dominate markets and centralize supply through network effects. Soon, it doesn’t seem coherent for statups and VCs making this defense of decentralization at the same time as they capture voluminous investments to dominate their fields of action. Web 1.0, with the great sites and portals, and Web 2.0, with social networks, followed this path. They started with marketing speeches and encouraged the emergence of champions. And there’s nothing wrong with that, by the way. It’s how the economy works, and whenever there are abuses the state must step in to balance things out. Companies can use Web3 as part of their marketing strategies. That’s legit. But there are also other ways to defend blockchain-based enthusiasm and promises in a way that is more reasonable and sincere.
Cryptoeconomy is doing well, thank you. But I don’t believe in web3.
Article originally published on Medium.
About the author
Pedro Henrique Ramos is a professor at Ibmec/SP and a lawyer. He is a PhD candidate in Communication and Consumption at ESPM/SP.