Peter A. McKay



“Number go up” was a problem in tech long before crypto

The ills of token speculation are frustrating, sure. But the history of the web1 bubble provides useful perspective and lessons for this new era.
Closeup of a toteboard with numbers

Photo by Nick Hillier via Unslpash

Below is the latest edition of #w3w, my free newsletter about decentralization. If you would like to receive it in your inbox every Sunday, please subscribe here.

One frequent criticism of blockchain technology you hear is that it’s only useful for betting on token prices.

From a technical standpoint, I don’t believe that’s true at all. Much more accurate to say speculation is often all people want to talk about. Sure, we tend to allow that topic to suck a lot of oxygen out of the proverbial room. But isn’t that really a problem with us, not the technology?

This is also a very familiar pattern in the tech industry, if your memory (ahem) stretches back far enough.

The 1990s dotcom bubble was plenty speculative, absurd, reckless and, yes, scammy in places. But even with all that era’s nonsense, some things of lasting value were still built.

Just to cite a few examples: Google, Amazon, and eBay are all still very much with us. The Netscape browser lives on, in a fashion, as the open-source Firefox browser. And the guys who built Netscape are now the biggest venture investors in Silicon Valley.

Does that negate all the insane marketing stunts, IPOs backed by no earnings, bogus analyst ratings of stocks, and other excesses of the late 1990s? No. But that’s exactly my point.

This stuff — all the positive and all the negative — happened at the same time, side by side. The biggest mistake one could make is to reduce that era’s history to just the awesome parts or just the unsavory ones.

You have to reckon with all of it, not just the parts that are convenient for you.

Web3 is a similarly mixed bag in the present day, I believe. Are Bitcoin and Ethereum, now worth a combined $1.6 trillion (with a “t”) and with increasing ties into the traditional financial world, going to suddenly collapse and disappear at this point?

Probably not, in my opinion. They’re here to stay.

At the same time, is Dogecoin a bunch of bullshit? Yes. Undoubtedly.

It has ever been thus. Get used to it.

Week In Review: June 16-22, 2024

  • The current heatwave in the U.S. may soon cut into the Bitcoin network’s hashrate, a measure of computing power devoted to minting new coins. As electricity demand for air conditioners increasingly competes with demand for crypto mining rigs, thus driving up power prices, the miners may cut their consumption to protect profit margins, according to CoinDesk.
  • Reading the regulatory tea leaves for Ethereum: Consensys said the U.S. Securities and Exchange Commission has informed management that it has closed its investigation into Ethereum 2.0. But some legal questions remain open. Separately, filings with the SEC show that Wall Street giant Fidelity has invested $4.7 million in an Ethereum fund it is hoping to list on public U.S. exchanges soon.
  • Stablecoin issuer Tether introduced a new “synthetic dollar” backed by tokenized gold. (CoinDesk)
  • New York Gov. Kathy Hochul signed two bills into law regulating social platforms’ interactions with users under 18, including data collection, notifications, and algorithmic targeting. New York’s new laws are the first such regulations at the state level in the U.S. (CNN)
  • Fairshake, a pro-crypto political action committee recently active in U.S. legislative races, announced that it had raised $169 million. (Cointelegraph)
  • Two U.S. lawmakers are urging humanitarian release of Tigran Gambaryan, a jailed Binance executive who has fallen ill while facing fraud charges in Nigeria. (Reuters)

Odds & Ends

  • Chocolate production may become more environmentally sustainable thanks to a new process Swiss researchers have documented for re-using the husks of cocoa pods, reducing waste. (Salon)
  • Just to be clear, bacon is not an ice cream topping. McDonald’s is ending an experiment with AI-powered ordering at the drive-through windows of more than 100 restaurants after users shared via social some hilarious mishaps the system generated. (BBC)

That's it for now. Thanks for reading the newsletter today!

To reach me directly with feedback, a story suggestion, or something else, email peter[at]w3w.media.

Best wishes for a healthy and productive week ahead.