Blockchains Create Value, Venture Capitalists Kill it
The 2017 ICO craze and the years following have yielded great progress for the blockchain industry. But in many ways, this current era has also sent the space many steps backwards.
Money Destroys Value
Blockchain development took a radical shift when VC firms and institutional dollars penetrated the space in late 2017 and early 2018. The current generation of blockchains are governed by directors, and designed to appease investors.
The presence of a heavily vested influence manifests itself across many “top” projects in the space as expensive partnerships and large marketing contracts to drive speculation and build hype.
It looks like delegated proof-of-stake with large monetary requirements and even greater rewards for the whales who qualify. It looks like research grants and security audits and legal opinions with five, six, seven figure price tags.
It looks like populating an ecosystem with otherwise uninterested developers earning handsome sums to deploy miscellaneous applications and protocols they probably could’ve done without any blockchain whatsoever.
It looks very expensive, and quite inefficient for what it sets out to achieve.
But it wasn’t always like that.
Blockchains Build Blockchains
Pre-2017, Bitcoin and other inventive altcoins did all the same things listed above, without Pantera, Polychain, or Andreessen Horowitz mandating exactly how to do this (to maximize their ROI, mind you).
Believe it or not, blockchains don’t need an ICO or private investors or otherwise to develop and grow. Blockchains have been developing themselves for the past decade by creating value and distributing it to their communities, thus building out an ecosystem of “incentivized participation”.
Bitcoin is the most obvious example. Miners dedicate their computing resources to propagate and secure the network. They get paid for doing so. That coin doesn’t come from any angel investor, the Bitcoin blockchain generates and distributes it.
But that’s only the tip of the iceberg. A number of early altcoins further expanded the purpose of block rewards and allocations to reward community members for different metrics of participation. Huntercoin paid their community to play its game (over a million dollars worth of HUC in total!). Digibyte also grew a gaming community with a rewards system that paid DGB for playing games like League of Legends and Counterstrike. Dogecoin built arguably the most robust community in the space with a tipping/faucet culture. Steemit attracted over a million users by sharing Steem block rewards with those who browse and create content on the site.
Beyond that, these coins used bounty programs for bug squashing, developing features, and micro-marketing (social media, forums, memes) to further improve their respective networks and build out active, passionate, and loyal communities.
The blockchains funded these programs themselves. Millions in ICO funds not required.
A Purer Tomorrow
The ICOs of recent operate a lot different than their fair launch predecessors. With millions in capital tied up and a collective of impatient investors, these “new era” blockchains must operate like a business- attract clients, generate revenue, turn a profit. The alternative is to die out, as many already have.
While some niches in the space are well situated for this type of set up, many aren’t. The days of yonder were more apt for their success, and the outside influence of a massive crowdsale translate to more harm than good.
In essence, blockchain development in 2020 is a zero-sum game, with some projects bleeding their funds and others collecting the drainage. That’s not how it used to be, and that’s not how it has to be, either.
The “old ways” of blockchain won’t die out, because they work. Blockchains can create value and fund their own development, and a number of newer projects are recapturing this mantra.
DeVault is one such example- a Bitcoin Cash fork with a “fair launch” (no pre-mine, no ICO) last year. It uses a DAO funding mechanism to grow out its community and build awareness. A portion of block rewards go into a marketing fund governed by DeVault users, which is allocated towards community contests, marketing content like articles, and so on.
There are other cool features, like offline staking rewards, meaning everyone takes a share of the rewards, regardless of whether or not they deploy an active node.
If you’re a standard crypto enthusiast/investor, don’t compete with the sharks that dumped hundreds of thousands into certain projects at massive discounts. Stick to DeVault and other projects like it. Look for the coins that incentivize your participation. The ones where the blockchain wins when you win. DeVault isn’t a zero-sum game. When the ecosystem grows, everyone in it is better off.
Blockchains are unique in their ability to create their own sustenance. Venture Capital kills this autonomy. Put your time and money into the blockchains that leverage it for growth, not the ones that siphon it up to their whales.
