Why don’t failed blockchains disappear?
“What is dead can never die” is the motto of a nautical clan from Game of Thrones series, but it’s just as appropriate for the crypto world, where many blockchains are clearly dead but somehow refuse to die.
If you doubt it, go to CoinMarketCap and you will see thousands of blockchains that have no viability or purpose, but whose tokens still trade as if they do. Some of the most valuable chains appear to be little more than the skulls of previous eras, supported by small trunks of pouch holders.
We all know the blockchains I’m talking about. Does anyone really see a future – or even a present – for the likes of Litecoin, Tron or EOS? Almost all serious crypto people, even if they won’t say so publicly, will quietly admit that such projects are “zombie” chains that lost to living, thriving blockchains like Ethereum or Solana.
If these zombie chains were companies, they would simply go away. That’s what happens in the traditional startup world where companies run out of money and shut down if they can’t grow. This is all part of capitalism’s “creative destruction” and a healthy thing for the economy. In the crypto world, however, the bugs are able to hang around – often becoming fodder for YouTube bottom-feeders, who feed off pump-and-dumps that tarnish the industry’s reputation.
I asked Adam Goldberg, one of the founders of the VC firm Standard Crypto, about this phenomenon and whether it would be better if more blockchains died in the same way as traditional failed startups. He gave an exciting answer.
“Death looks different in crypto. It’s much more silent in crypto. If you’re just a smart contract on the blockchain, you die because no one interacts with you, and if you’re a [Layer 1]you die because nobody builds on top of you,” he said, noting that the nature of blockchains means that even dead projects don’t go away.
While all of this is true, it is also a problem for the crypto industry because the persistence of zombie chains diverts money and attention away from viable projects, slowing the adoption of successful blockchains. But this may not continue forever.
Albert Wenger, a longtime crypto investor at Union Square Ventures, says the current state of crypto reminds him of the early days of the internet where there were competing protocols for services like email and file transfers. Over time, of course, consolidation took place, and Wenger predicts that the same will happen in crypto – although it will take some time.
“A lot of these chains still have some activity — they’re not complete ghost towns. The shake out will take a very long time,” he said, adding that part of this is driven by uncertainty surrounding the upcoming Ethereum upgrade known as “the merge ».
Wenger added that periodic downturns in the industry, such as the current crypto winter, serve to wash away the fly-by-night opportunists that emerge during booms. In the meantime, he says he welcomes those who want to build new blockchains – even if the market seems saturated.
“I love that people try – innovation comes from people trying new things. Sometimes the thing doesn’t work by itself, but sometimes the features do,” he says.
The bottom line is that the same forces of creative destruction are taking place in the crypto industry as in the conventional startup world – even if the process takes longer, and if we have to tolerate the presence of dead blockchains for a few more years.
Meanwhile, it’s also possible that some of the fading blockchains have more life in them than we think. For those skeptical about the future of Tron and Cardano, the founders of these blockchains will be speaking at Messari’s highly anticipated Mainnet Conference – where Fortune is a media partner – 21.-23. September. More news below.
Jeff John Roberts
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@jeffjohnroberts
DECENTRALIZED NEWS
Credits 🚀
Coop launches with $5 million more take advantage of NFT fandom
The NFT collective Proof rprovides 50 million dollars in a 16z led round
Argentina’s Mendoza Province now accepting crypto for taxes and duties
Reddit co-founder plans to raise $176.5 million crypto fund
Debits 🐻
Crypto.com going out of huge Champions League sponsorship
Bitcoin lovers Micro strategy CEO sued for tax fraud
El Salvador’s Bitcoin bond delayed again
Matt Damon-backed crypto firm sends a $10.5 million refund to woman instead of $100
FOMO NO MO
Who do you call evil? Crypto VC giant a16z released a new set of legal tools for NFTs that, in a riff on Google’s one-time motto, are called “can’t be evil.” Aside from the sweet description, the tools themselves will be an amazing asset to the crypto world.
The tools are a series of six Creative Commons licenses that specify what an NFT buyer can and cannot do with the work. CC licenses are hardly new – they’ve been around for more than 20 years to facilitate internet sharing – but this appears to be the first time they’ve been deployed in the context of Web 3. Their arrival is timely given the cloud of legal uncertainty hanging over NFTs in terms of IP rights represent a new legal frontier on the blockchain.
Standardized NFT-specific licenses should ideally be tracked and enforced on the blockchain to provide more security for users. Better licensing frameworks have the potential to make high-quality licenses more accessible, remove ownership ambiguity, and save creators some of the burden (and expense) of creating their own licensing regimes.
FINANCIAL STATEMENT
Tezo’s Co-Founder 3 Things in Crypto That Will “Age Badly” by Taylor Locke
What’s next for Meta after the company’s metaverse lead leaves? by Marco Quiroz-Gutierrez
Coinbase Says Exchange Will “Consider Any Potential Forks” After Ethereum’s “Merger” by Taylor Locke
Ticketmaster Web3 push allows event organizers to release their own NFTs by Marco Quiroz-Gutierrez
Singapore looks at encryption and threatens industrial hub status by Leo Schwartz
What is Proof of Stake? Ethereum’s future eco-friendly model explained by Taylor Locke
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
IF YOU DON’T KNOW, CRYPTO
Have you ever seen a whale? It’s a fairly common activity in the crypto world that market watchers keep an eye on whales-owners of large sums of crypto, whose transactions can single-handedly cause the price of a given token to rise or crash. Many whales keep their identities secret, but thanks to the public nature of blockchains, it is possible to keep track of their activities by looking at their wallets.
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