The cryptocrash, the swan song of Blockchain?

Is the cryptocurrency crash challenging blockchains in general?

There are two uses for blockchains, I think. On the one hand, what I would call crypto casinos, that is, all these speculative moves that exist around cryptocurrencies that have led to the crash that we continue to see evolving before our very eyes. A significant portion of the cast has little to do with the world of technology. Exchanges I had with some, they often have a very sectarian approach, on the theme of “sovereign currencies are worth nothing” or even “it doesn’t matter if blockchains consume energy because that’s not carbon (!) is huge”, etc .

And on the other hand, there is another form represented by the world of innovators, who develop sometimes expendable or non-exchangeable crypto assets, and especially who deal with sometimes complex smart contract issues, which in my opinion is the most interesting. These smart contracts make it possible to take many things into account, such as creating traceability of CO2 emissions, certifying spare parts, NFTs, etc. It is an exciting universe.

What are the challenges of these universes?

The challenges are not only very numerous, but also very difficult to solve. The first is processing speed and power consumption (which are related factors). If there are really interesting leads – the one from Ethereum for example is really exciting – to solve this problem, I doubt it will disappear in many years. Basically with Bitcoin you are limited to between 3 and 6 transactions per second with insane energy and carbon costs, about a hundred euros per transaction. In comparison, a network like Mastercard can theoretically run up to 100,000 transactions per second (in reality, they’re doing more like 1,500 to 5,000) for an energy cost that’s hard to estimate, but likely much lower in cents.

Another challenge is the interoperability between crypto assets. If you have to systematically go through players like Coinbase on Binance, you lose much of the interest of the system, with transaction fees and centralization of the data. If we compare to web 1.0, in the late 90s there were a whole bunch of standards that clashed and certain sites were only compatible with certain types of browsers. A huge standardization effort was required to ensure overall compatibility.

Finally, no offense to the ultras, there remains the challenge of regulation. The number of scams in this universe is still far greater than is acceptable. Not to mention lost credentials. I was chatting with Changpeng Zhao, the founder of Binance a few days ago. He told me that he estimated at a few percent (3 to 5%, maybe more…) the number of people who were in this situation. This is also his first challenge. Solutions like Ledger can partially solve this, but the user experience remains truly priceless.

Is web3 a fad or an enduring trend?

Not a trend but just, it takes a long time. The web was born in 1989 and the norms underlying it only really stabilized in the mid-2000s. The reason I believe in it is that the main economic and social brakes on a more inclusive society are rental situations, bureaucracy, etc. . However, these technologies are naturally capable of meeting much of these challenges. everything still has to be written: the technology, but also the regulations. It may be a road of several decades that presents itself to us.

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Gilles Babinet is a digital entrepreneur. He is a contributor to the Institut Montaigne on digital issues and is currently working on issues related to digital technology and carbon emissions.