“The only thing that really worried me was the ether. There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge.” — Hunter S. Thompson, Fear and Loathing in Las Vegas

Everybody wants to believe they’re bettering the world, and what’s more, that they’re on the brink of a revolutionary transformation. And when you’re immersed in a whole cohort of such people, a whole movement, as I was this week at the Ethereal Summit, a conference for startups building decentralized apps atop the Ethereum blockchain … well, it’s hard not to get swept up in that belief.

This is as true of the “old world” of VC funding as it is of the “new world” of ICOs. People who are angry and cynical about venture capitalists and the Silicon Valley ecosystem — and I know many — often don’t appreciate the extent to which VCs genuinely believe, in good faith, that what they do makes the world an enormously better place, by nurturing green shoots of innovation into a mighty forest of progress, and are genuinely baffled by the counter-narrative that they reinforce pre-existing social stratification while mostly just helping the rich get richer.

The anti-crypto1 counter-narratives are more varied. One is that all of this magical Internet money is a giant scam or Ponzi scheme. Another is that it’s only good for criminals and terrorists. A third is that the crypto1 space is just a casino for speculators with no real underlying value. To those of us who understand the technology, and its potential, these kinds of criticisms are fairly easily dismissed.

But even if, like me, you believe blockchains and cryptocurrencies are a fascinating technology with enormous potential, and you see in them a potential counterweight / cure for most other technologies’ ongoing concentration of power in a handful of massive companies; even though, bit by bit, one by one, former skeptics are grudgingly beginning to admit that they may be good for some things after all —

I just recommended blockchain as the solution to a problem and now I will be sobbing in the shower for the next 8 hours if anyone needs me — the grugq (@thegrugq) October 27, 2017

— you can’t help but notice that, to date, crypto hype and promises outweigh actual tangible real-world adoption and accomplishments by a very, very large margin. Say what you like about Valley VCs, but you can’t argue that they don’t have a long, proud history of momentous, world-changing success.

There do seem to be green shoots of future success in the crypto world. I’m on record (see “Blockchains are the new Linux, not the new Internet“) as arguing that decentralized consumer apps are unlikely to take off. That said, though, decentralized blockchain apps in many spaces, even non-financial ones, — such as, say, power grids or reputation economies —

To oversimplify, it's a publishing platform which includes a reputation ecosystem that is used to verify stories and individual facts. — Jon Evans (@rezendi) October 27, 2017

seem like they have real potential, in the long run. As does the whole new nascent crypto economic ecosystem, wherein value accrues to protocols not to companies. I admired Olaf Carlson-Wee, of Polychain Capital, suggesting that crypto companies shouldn’t be interested in revenue. That sounds insane to those accustomed to traditional economics, but when value accrues to protocols not businesses, businesses make their money from the appreciation of the tokens they hold, not from revenue.

Similarly, It’s a good thing — in the long run — that cryptoasset investments are increasingly being made available to ordinary people, eg via Bitwise Investments‘ new index fund.

But it is not good to promise the world too soon. Don’t talk about blockchains as the path to artificial general intelligence, even if — especially if — the actual underlying project sounds interesting. Don’t assure the audience that companies worth hundreds of billions of dollars “will be coming out of this room.” Don’t talk about how “we are all becoming godlike in multiple dimensions.” (I’m refraining from naming names, but yes, those things all happened onstage at the summit.)

The crypto world has developed a nasty habit of over-promising and under-delivering. In fact it seems to have strongly incentivized over-promising and under-delivering, which is pretty ironic since crypto-economics is supposed to largely be about correct and productive incentivization.

There are signs that the irrational crypto boom is coming to an end; ICOs which a few months ago might have sold out in hours seem to now be struggling. Regardless of whether we’re at the inflection point right now, it seems clear that a major correction, a Great Winnowing, is coming. That’s what happens when you over-promise and under-deliver.

That won’t mean the death of the space. Rather, it’s the Gartner Hype Cycle write large, and measured in billions of dollars. Those who survive the Great Winnowing should thrive. But the more they strive to under-promise and over-deliver, the less painful that correction will be, when it comes.

1Apologies to my cryptographer and hacker friends for the theft / repurposing of this prefix, but, realistically, descriptively, in the modern tech context, “crypto” now means “cryptocurrencies.”