Crypto can’t thrive on VCs and FOMO forever | Opinion

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As a seasoned entrepreneur with a track record of building successful ventures, I can’t help but feel a sense of validation seeing crypto finally stepping into its stride. The excitement is palpable, much like the buzz that surrounded my first venture at 21, and it feels like we’re on the cusp of something truly transformative.

Amidst the excitement following the US presidential election, cryptocurrencies appear to be unstoppable. For the first time, Bitcoin (BTC) has exceeded $100,000 – a figure that seemed implausible only a year ago. This surge has created a sense of urgency among investors and entrepreneurs who are eager to capitalize on this trend. However, it’s crucial we don’t let the hype overshadow the essentials. While these moments can be thrilling, they can also make us overlook the foundational aspects. To ensure blockchain technology thrives in the long term, we should prioritize developing practical applications that yield consistent income rather than focusing solely on short-term speculative gains.

I understand your perspective. The enthusiasm surrounding this space is truly infectious. It’s no secret that we thrive on volatility and ambitious ventures, but it seems this time the buzz isn’t mere hype. The message is crystal clear: cryptocurrency is now poised for genuine mainstream usage. Innovations such as account abstraction and chain abstraction are streamlining user interactions. Pioneering projects like Farcaster are testing limits, while tokenization is rapidly advancing (though meme coins occasionally elicit a wince).

The growth we actually need

Absolutely, the increase in Total Value Locked (TVL) and the rising demand for Bitcoin ETFs indicate a growing ecosystem. Similarly, it’s common for tech startups to rely on venture capital during their initial stages. However, it’s important to remember that no sector can sustain itself solely on venture capital funding forever. Eventually, every business must become self-sufficient and produce tangible income, which is known as revenue generation.

Consider early crypto ventures as unborn babies in a womb, heavily dependent on Venture Capital (VC) funding for survival. However, they must eventually learn to live, walk, and thrive independently. We’ve now reached that stage where crypto is ready to leave the nest and demonstrate its ability not just to innovate, but also to be self-sustaining.

For far too long, expansion has been linked to inflationary token systems. Though these structures may seem logical from a technical perspective, the value they generate is frequently unsubstantial—it revolves more around the circulation of supply than genuine demand. Fortunately, there’s a shift towards novel models arising, and they are not solely about speculation; instead, they aim to address genuine issues, encourage widespread acceptance, and grow in substantial ways that matter.

Don’t get comfortable

Crypto startups must aim higher than just pumping valuations or driving quick returns. Token prices are flashy, but they’re not the endgame. Our focus should be on building sustainable, interoperable economies. Models built on the assumption that a native token will “just keep going up” are inherently unstable, feeding the skepticism that clouds crypto in traditional markets’ eyes.

It’s great to know we have everything ready for a change! Once user experiences match technological abilities, there’s an excellent opportunity to establish strong companies that prioritize users.

A notable advantage lies in the concept of interoperability. Ponder why the dollar is cherished – it’s accepted everywhere. Now imagine if every store you visited used a unique currency. Shopping would turn into a complicated ordeal. Cryptocurrencies should avoid this predicament. Rather than overcrowding the market with separate tokens, we should concentrate on providing valuable rewards and assets that can be utilized across various platforms.

Translation: This doesn’t imply giving up the distinctive benefits of blockchain. In fact, many L1s (Layer 1) and L2s (Layer 2) support tokens that are compatible across various DeFi (Decentralized Finance) products and beyond. It’s now more important than ever to embrace token economics that reward users with usable assets rather than just speculative investments.

The bottom line

Blockchain technology has the capability to significantly transform the global system, much like switching from steam engines to high-speed trains—faster, more intelligent, and superior in many ways. However, no matter how groundbreaking it is, fundamental economic principles remain in effect. If our offerings fail to produce genuine financial returns, they won’t thrive.

Hype trends may rise and fall, but if we concentrate on crafting valuable, sustainable products, the potential for growth is boundless. It’s not just a hopeful idea; we’re prepared to turn it into reality. The groundwork has been laid, and the opportunities are immense. Let’s ensure we don’t miss out on this chance.

Yair Cleper

Yair Cleper is the co-founder and chief executive officer of MagmaDevs, a team of proficient blockchain developers working on web3 infrastructure innovation, and also a contributor to Lava Network – a decentralized marketplace for data providers that facilitates transactions and user requests across over 40 different blockchains. A seasoned entrepreneur, Yair started his first company at the age of 21 and has since launched numerous successful startups. He single-handedly spearheaded and managed Supersmart – the world’s pioneering cashierless supermarket checkout solution – for six years, scaling it to process an annual $1 billion for leading retailers in over nine countries. Besides Supersmart, Yair has co-founded cutting-edge startups such as Ogmenti, focusing on augmented reality, and Octopai, a business intelligence platform. Throughout his entrepreneurial journey, he has secured more than $50 million in funding, assembled teams of hundreds, and achieved two successful exits.

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2024-12-13 15:14