In the wake of a more than 50% price drawdown in major cryptocurrencies and the collapse of some huge financial experiments, public sentiment on crypto has done a predictable 180 degree turn. It happens every few years: A crypto price bubble draws in a new wave of speculators, many of them get burned after making bad bets on technology they don’t fully understand and sentiment swings hard the other way. We’ve gone from the era of Davey Day Trader doing cute things with dogecoin to surgeons in Massachusetts losing their life savings on luna.
True, blue chip tech stocks like Meta and Netflix have lost nearly as much as BTC in dollar terms over the last year, but we’ll set that to the side. The crypto backlash is here, and it’s taking extremely familiar forms. Jackson Palmer, who initially created dogecoin as a performance-art critique of crypto, is making a new round of skeptical declarations. Molly White, founder of the anti-crypto blog Web3 is going just great, is getting profiled in the Washington Post. The skeptical “Crypto Critic’s Corner” is suddenly one of the top technology podcasts in the world.
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And good for all of those largely constructive and incisive critics. Having a healthy presence of informed critical voices is a plus, not a minus, for any serious emerging tech sector. But the broader backlash is going to produce much more worrisome nonsense, including its own set of evasions and misrepresentations.
Chelsea Manning provided a sterling example in an interview published Tuesday in which she did an awkward crabwalk around the word “cryptocurrency” when describing her work for a project called Nym. Manning described herself as a “crypto skeptic,” and attempted to explain how her project that uses a blockchain to supposedly preserve privacy isn’t part of that industry. But Nym has a token … which incentivizes network maintainers … and, look folks, it’s a cryptocurrency! Chelsea Manning is helping start a cryptocurrency and that’s actually fine!
Manning is a champion of privacy and democracy, a person we should all look up to for a few reasons, and it’s heartbreaking she feels the need to do this crypto-skeptic Kabuki while taking checks from a crypto startup. The idea behind the Nym project also seems … debatable. If you’re trying to protect citizens from government surveillance, a blockchain is maybe not the place to start. Sorry.
Getting crypto-shamed by a renowned privacy advocate pitching an iffy token project? That’s the very definition of “down bad.” And the wave of smug skeptics is not going to slow anytime soon, partly because this crash has clearly found its villain and fall guy in the form of Do Kwon, whose $68 billion luna/terraUSD stablecoin pair imploded in early April like a pair of retracting testicles. I say both villain and fall guy because he’ll be remembered not because he triggered the broader market crash (He maybe kind of did.) but because he and his work embodied all the worst excesses of the various screwups, improvisers, hypebeasts and charlatans who made the crash possible.
See also: Crypto Hype Cycles and You | Opinion
In previous years, that dunk-tanker might have been Mark Karpeles of Mt. Gox or Gerald Cotten of QuadrigaCX, but this time, after crypto reached levels of public exposure it has never seen before, it’s Do Kwon. He’s going to be all over TV for months. Having such a living embodiment of egotism, venality, recklessness and stupidity standing in for “crypto” as a whole is going to make things measurably worse for the industry. (And you should absolutely be mad at him about this, in addition to everything else.)
It’s going to be a rough stretch, and nobody actually knows how rough or for how long. Many of us have seen this show before. While there are variations, the crypto retrace cycle has repeated four or five times now. Each time, the same behaviors crop up as crypto goes from mania-of-the-month to whipping boy. The good news is, the retreating tide also presents opportunities.
‘Blockchain, not crypto’: bear-market cringe
But the thing is, people will continue to enjoy taking investor money. Considering signals like Andreessen Horowitz’s new $4.5 billion crypto investing fund, a decent amount of capital may still be on offer even with public sentiment of crypto in the toilet. So you’ll hear a lot of squirming and doublespeak like Manning’s as people who still want that sweet, sweet crypto cash try to downplay their actual crypto activities.
Manning’s evasion is a close cousin of the all-time great in this category, the argument for “blockchain, not crypto.” This is a meaningless concept because tokens with economic value are fundamental to the design of distributed public blockchains, at least for the moment. But rhetorically, “blockchain, not crypto” is meant to signal that one wants all the cool parts of blockchain tech without the financial volatility.
“Blockchain, not crypto” has in previous downturns been a particularly attractive line for blockchain units within large corporations. Not coincidentally, one way of actually executing on the hollow premise of “enterprise blockchain” is with tightly controlled private networks, which may have some limited long-term promise but nothing remotely resembling the weird transformative implications of public blockchains. It’s a rhetorical feint, meant to trick people who sway with the breeze of shifting sentiment and don’t actually understand crypto at all.
Living in winter
Simply ignoring these craven contortionists is step one of thriving during a crypto winter. Another good move is to try and understand what happened. Why did Terra collapse? Why is SOL down 80% but ETH only 58%? There are actual reasons, and if you learn them now you’ll be better prepared when sentiment around crypto shifts the other direction and the next wave of impulsive swing-buyers arrives.
Another simple to-do thing but one you might not want to hear, is “stop day trading.” There is still downside out there, and no one knows where the market will bottom out. Secure whatever capital you’ve got left and shift focus elsewhere – specifically, to participating in communities, actively using products, developing skills and maybe even building something. Day trading is a sucker’s game even in boom times, but during bear markets it’s truly something to leave to the professionals. Calling yourself a “degen” on Twitter is less fun when your formerly hilarious gambling addiction has left you actually destitute.
See also: A Dictionary for Degens | Opinion
Spending this time learning is a path towards not just minimal self-respect (also, consider showering more) but actual success. Even a level 1 crypto speculator is learning a lot about the space, and at this point in the industry’s growth that knowledge will have value even during a crypto contraction. Prominent people in the industry will become a lot more accessible in the coming months as well, so you can really lay some groundwork for a future career move.
But the most important tip for surviving the crypto backlash is very simple: stick around. The sharply cyclical nature of crypto is its biggest annoyance and opportunity because it provides new entry points for the committed while regularly washing out the dilettantes. Whether you’re a new hire at a crypto company wondering if it’s time to ask Goldman Sachs for your job back or an ambitious newcomer hoping for a break, the biggest mistake you can make is taking your eye off the ball. You never know which way it’ll bounce.
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