How the “Ponzi” of crypto kills innovation
Here’s a great example of why most “crypto dudes” are terrible customers, expecting tech for free, but unwilling to pay for it.
It’s not exactly their fault, by the way: it’s my contention that these cheapskates are a byproduct of the “Ponzi of crypto.”
I served as CTO for a company that aspired to deliver self-governance technology for stateless and refugee populations, and the promised solution had generated media attention from BBC, Forbes, Russia Today (RT), The Economist, The Telegraph, Bloomberg, International Business Times (IBT), TEDx, The Guardian, WSJ, Business Insider, Le Figaro, Tech Crunch, Huffington Post, Vice, CNN, New Statesman, The Atlantic, Independent, Wired, and others.
The company was structured as a crypto venture, meaning this:
Rather than license the software for sale, the software was going to be made available for free, and delivered open source.
How was the software going to be built? Easy! The Ponzi of crypto!
It looks like this:
- We promote a vision (white paper and marketing)
- People recognize the utility
- People evaluate the team’s reputation for delivery
- If people believe we can deliver, they buy crypto
- The crypto increases in value
- The management sells the crypto for other currency
- And THAT currency is used to pay for the tech to be built
In 2018 we’d delivered an app, helping the company raise a few million bucks, but the response was not as expected or promised, and I wanted to know why.
Why aren’t people buying more currency?
So I defined a package for a “self-government in a box” and shopped the concept to targeted customer communities, seeking to gauge their perceived valuation.
In other words:
- I literally created a box
- told them what would be included inside
- asked them what they are CURRENTLY paying for these services
Many were CURRENTLY paying a lot of money for the services, AND they badly wanted and needed the additional services that were promised, but guess what?
They had no willingness to pay even a penny for the promised package, and can you guess why?
They believed that the software would be built and provided for free, because OTHER PEOPLE would be buying the crypto necessary to fuel the endeavor.
Get it?
It’s a classic example of the tragedy of the commons, which strikes me as extremely ironic, given how frequently the crypto crowd runs their mouths about “the commons.”
the tragedy of the commons is a situation in which individual users, who have open access to a resource unhampered by shared social structures, formal rules, charges, fees, or taxes that regulate access and use, act independently according to their own self-interest and, contrary to the common good of all users, cause depletion of the resource through their uncoordinated action in the case that there are too many users related to the available resources
The company failed, and I took what was left of my software engineering team and created 214 Alpha, frankly because people had not been paid for a couple months, and the team was unraveling.
I hate laying people off, and the chaos of the company’s insolvency was worse.
I proposed to the CEO a model that would pivot to software engineering serving as a profit center, leveraging more tried-and-true business models to evolve the tech while generating enough ongoing revenue to sustain baseline operational expenses until the crypto slowdown improves.
She rejected the offer, but it kind of didn’t matter, because by then the team had already departed consistent with their own employment contracts (no pay; no work).
I told a few of the same targeted customers that we intended to build a streamlined version of the same package, with a deemphasis upon the crypto model, and asked if they were willing to purchase the solution, based upon a model that displaced their current tech in favor of the new one.
100% said no, because they felt entitled to receiving the software utility for free, with stubborn belief that the software itself would be built by other people’s investment in crypto.
In other words: the Ponzi of crypto killed the potential for innovation, making a small number of clever hucksters briefly wealthy, at the expense of others.
It’s been almost five years and as far as I’ve seen: zero of these potential communities have adopted an alternative model.
Which is probably because they are still waiting for someone else to create it for free, and in the meantime they’ve continued spending $$$ on the existing tech, which is probably still considered insufficient and unduly expensive.
Cool.
I’m not “anti-crypto,” by the way. The tech has promise in some applications, and I believe electronic currency is here to stay.
But the Ponzi of the traditional crypto model has hollowed out the potential for innovation.
