Welcome to the Abyss of Despair

Per request from my community members, and out of my own interests, I finally decided to start writing something. I never tried to write a blog or keep a diary in my life, so don’t be surprised if I stop at some point. Also, I will try to keep this blog casual (or I lack the ability to write with academic proficiency), so most of the contents will not be very technical and well sourced.

Allow me to begin with some thoughts on the past.

It’s finally here, the entire crypto market is shrinking, liquidity vanishing, and price dropping. We knew it would come, but most of us deny the reality. The story goes back 1 yr ago while I was still running marketing firm Fourier. Back then most of my partners, colleagues and friends do crypto investment based on one simple principle: No public chains.

（Trading volume of Ethereum in 2017, source https://coinmarketcap.com/currencies/ethereum/ )

The reason is simple, there’s no need for a public chain unless there’s something ethereum cannot come up with with an add-on app, 2ndary protocol or hardfork upgrade. Based on this principle, the imagination for new crypto projects were already running out in the summer of 2017. What more you could expect when Mega raise like Polkadot and Filecoin are already killing it?

But at the micro level (let’s put the macro economic situation aside), things turned 180 degrees after the infamous Chinese ban, aka the Sept. 4th event. Weak hands were so scared that they created a huge dip for the free world to buy in. Then ppl invented a new bubble: higher tx throughput.

（Bitcoin trending after Sep 4th, source https://coinmarketcap.com/currencies/bitcoin/）

New room for imagination and speculation, and everybody can make a new smart contract platform. Roller coaster ride, then everything, even the dead projects, saw their ATH.

I’m not saying new platforms are bad, with integrated storage solution, oracles, naming system, pluggable modules…they are good, and they will see the arrival with new, real decentralized applications (no one needs billions to build a blockchain though). But this is already smelling like 2014 all over again. Back then it was “everybody can launch a token since Bitcoin can do it”. Now “everybody can make a smart contract platform since Ethereum can do it”.

（The bear market during 2014–2015, source https://coinmarketcap.com/currencies/bitcoin/）

Most of the shitcoins back then were effective Bitcoin forks with a change in the name, similar to today’s Ethereum forks. Oh, remove that PoW part, that’s a pain, Let’s do PoS. What do you expect with these “chains”?

Of course, many quality projects will survive to the day of mass adoption, I will give some intros in the future.

Now, Let’s look at the macro economic side, which is so much more than a background. Fiat systems have its intrinsic flaws in that the minting authority just cannot resist the temptation of over-increasing the money supply, and they don’t have a “community consensus” issue for check&balance, for some, they don’t have check&balance at all. That’s how most economies effectively stimulated the recovery and growth from the last economic crisis which we crypto people know very well. And that’s how this non-stop flow of capital created the stuffed lakes of asset bubbles.

(US stock market capitalization chart on Jan, source https://ycharts.com/indicators/us_total_market_capitalization)

（Shanghai real estate price trends, source https://www.anjuke.com/fangjia/shanghai2018/)

（Crypto Capitalization on Jan, source https://cryptolization.com/）

If you look at the asset price, such as real estate and stock market, they very much coincides with crypto market, reaching a staggering height early 18, at least in China. Yes, crypto market is merely a small stuffed lake with waters spilled over from neighboring big ones. Actually the fact that crypto prices drop so quickly and sharply shows we are better than the rest: we are truly borderless and limitless, so entry/exit is free. Look at Chinese real estate market’s mandatory ban on sales, haha.

Now we learned it the hard way, US dollar is still the strongest currency in the world. All money goes back to USD with its rising expectations. You see, your lost in crypto has so much more to do with other factors than merely scammers and bubble burst.

(Expected halving of Bitcoin, source https://www.bitcoinblockhalf.com/)

1 or 2 months ago I suggested ppl to be patient for a bear to last as long as 18 months. And I got ppl warning me not to, said ppl cannot even take it for 6 months. People, let’s face it, we are not going to see a sudden, sharp 180 degrees turn of the momentum in at least 6 months, no one can develop apps or build strong traction in that short amount of time. Our biggest chance is that crypto economy beats the world economy in 2019.

But can someone tell me how those dapps in the prophecy look like?

Good news is, we are surely riding to the bottom of this Abyss, where things cannot get any worse. From there, we will accumulate for the arrival of a real crypto-economy.

Is this where I tell everyone to Hodl?