Thought on the “Crypto Winter”
By: Dave Appleton
Tags: Crypto Winter, Ethereum, Financial Inclusion, Blockchain

Winter in Budapest, Hungary. Photographer : Nagy David

Thought on the “Crypto Winter”

Looking at it from where I stand working for a real financial inclusion product.

In September 2014, from a background of designing automated vision and industrial test systems, I started working at a blockchain startup in Singapore called Tembusu Systems. Our aim was to build a system that had privacy (borrowing elements from Monero) while ensuring accountability so that it could actually work as a legal currency. I worked with some amazing guys, had zero knowledge proofs explained to me in a manner I could understand and started to get hooked. We were starting to gain some traction in mid 2015 when, for reasons beyond the scope of this, we had to stop.

In late 2015 one of our former clients, HelloGold, a financial inclusion product, approached me to continue what we had been trying to do but this time using the new Ethereum platform. I looked at ethereum, wrote my first oracle and was hooked.

With an eye on the consumer market we decided on mobile technology and a traditional backend to get us to market quickly while building up the feature set.

A distinct design focus was to architect the system so that the migration to a blockchain back end would be as painless as possible but initially we were building partnerships and testing out product ideas.

As a result, we had a demo product out within a few months to secure investors and a live MVC out by end 2016. We launched the product to the public with an announcement of a partnership with a well known credit organisation in April 2017 and started planning our way forward to having an ethereum back end.

At this time nearly 34,000 people have signed up for the HelloGold app and many of them have purchased gold using it, some large amounts but many just buying small amounts.

I seriously do not think that more than two or three of our many thousands of active users care about decentralisation.

Some remember the 1997 South East Asian financial crisis where the Ringgit (and several other neighbouring currencies) crashed against the US Dollar.

The dramatic fall in the value of the Malaysian Ringgit in 1997/8 until the dollar peg.

Many remember 2009 but most people are simply interested in protecting their savings.

How does this relate to the “crypto winter” ?

Thanks to the early ICO’s doing so well, started by everybody supporting each other and ether being mainly in the hands of enthusiasts, we started drawing people into cryptocurrencies who neither understood nor cared about what the platform offers. Media reports of the guy who sold his house to buy bitcoin caused a frenzy of speculating on a set of technologies that was, quite frankly, not delivering sufficient value to justify a fraction of its value.

As we know, the walls started crumbling in early 2018 and have been tumbling ever since. Very few expected ether prices to fall below $300 but hey, down they went. Speculators got burned as did many who accepted payment for work in crypto.

So maybe it is time to look at what we are building and how it impacts society.

Vitalik Buterin’s famous tweet in late 2017 read :

I think that 2018 has proven that we haven’t.

The introduction of parallel computing with GPU’s redefined computation algorithms so that splitting a task among ten GPUs could give more than a 10x improvement in performance link, similarly Virgil Griffith stated at Devcon that ethereum has actually changed the rules of many financial products in a way that some things that were impossible are now possible.

From where I stand, apart from needing to achieve many things on the core tech side (we have a few thousand insanely smart people at Devcon working on that) we also need to look at building stuff that impacts real people’s lives in a way that nothing else can.

invisibility

I was told of Nicholas Negroponte saying that in order for a technology to become widely adopted it must become invisible.

I remember dBase II arriving. We used to go to shop owners offering to “build them a database” so that they could throw away those bulky catalogues and simply look things up on a computer. In these more enlightened times, customers no longer “use databases”. Instead, they browse the items available, order something on Amazon, pay for it and track its progress until it arrives. The database is pretty invisible to the end user.

Taylor Monahan has talked about this before, that while we are aware that we are using private keys we have not achieved universal adoption. Alex Van de Sande’s team’s work on universal logins and gas-less transactions is moving us in this direction. I hope to see more soon.

Solving problems that matter

I am amazed at some of the stuff that people are building on ethereum. Prediction markets, DAOs, decentralised exchanges and oh so many more, but to quote a very old friend, how does this affect the price of fish?

I am not stupid by any means (I hope) but I have not seen case studies on how each of these technologies are going to work together to build something genuinely awesome that I can understand. Please sell me a dream that I can understand.

The huge number of financial inclusion projects in the space will, I hope, make a huge impact on the world.

As well as working for HelloGold, I keep close ties with teams like Sentinel Chain and Kommerce who are empowering small business in Asia and Africa.

The Rohingya Project’s work on getting on chain ID for Rohingya refugees is another powerful project — and we met many other amazing projects outside Asia at Devcon in Prague.

SpankChain have distinguished themselves by taking what is often regarded as a dodgy industry and showing that there are serious issues that need addressing which can be solved using blockchain technology — and really improved the safety of everybody involved.

Fairness

I remember that during one of my “down” periods, I had to repay a credit card debt. The bank made me sign a repayment document which fixed the interest rate during the repayment period. They stopped giving me statements and secretly raised the interest rate halfway through. I was lucky to have caught it. We could stop this kind of thing.

Secured Loans are often abused by pawnbrokers who have tricks to try to avoid having the pawned item sold in the case of default. This allows them to avoid paying you any balance in the value of the item pawned.

Smart contract technology can solve these and many other problems. As an example, HelloGold is working to allow a person’s gold savings to be used for collateralised loans governed by smart contracts which ensure that they are treated fairly.

Another Killer App

Matthew Tan commented that so far, the ICO has been the “killer app” of ethereum. It would be sad if it ended there. We can do so much more.

We need the kind of blockchain based application that people can immediately see the benefit of using. No buzzwords. It can use all of the amazing technologies mentioned but should not “name” them, simply show how they make the product possible. And irresistible. And fair.

And we need to publicise them.

We need to look at existing problems and current solutions and say “could a blockchain make this more efficient of fairer?”. If the answer is no, we move on. If not, then we see if it is viable to build a new system.

We need to get to the point where every solutions architect understands blockchains and will use them where appropriate rather than the current situation where we are looking for places to apply blockchain technology.

At the end of the day, we need to make blockchain boring to all but the people working with it. It should become invisible.

Will this end the “Crypto Winter”?

I would love to say yes to this question. It would allow me to use the ether and tokens that I earned writing code for people to support my family better but I don’t know.

I do know that it will stop 2018 being remembered as the year blockchain started to fade into irrelevance or became a software tool that only bankers use.