This post was originally published for Game Theory Crytpo Group in July 2018.
Imagine walking into a Chuck-e-Cheese and having to buy different tokens for every game you wanted to play. This is essentially what crypto has brought to us as far as utility in altcoins go. Each and every single utility token has built a private ecosystem that is closed off from the rest of the world. Interoperability has always been a heavily debated topic, yet more and more utility tokens with absurd valuations keep popping up. Instead of moving closer to a more user friendly environment, interoperability across tokens has decreased. The solution is so blatant that often times we fail to recognize it. The solution is Bitcoin.
After a massive run up in late 2017, it was clear crypto had become the next wealth generator. Unprecedented returns were being seen, and those that were late, refused to enter at astronomical price points seen in December. In order to lure new investors, people propped altcoins with no real use case, purely raised money on speculative utilities. These greed monkeys that saw an opportunity to make real money in a nascent space by building out horizontally. Why build on bitcoin when you can create your own token and sell it as the next big thing? Accredited investors and VC firms backed many of these tokens prior to an ICO (initial Coin Offering), because they were offered discounts in the private sale round. During December 2017 just about any ICO could have raised 10 million. It was an opportunity to dump on retail investors and make 100x returns.
Retail investors saw tokens gaining steam from well-known firms and bought in for long term prospects. The excessive buying from retail post-ICO would build minimal liquidity in an a chronically illiquid asset class. After investor token lockups ended, they would dump on the open market spurring a massive sell-off. These large sell offs would often even come from those who created the tokens.
The process to create a token was as simple as forking an existing token and making minor changes to the code. Founder of Zclassic, Rhett Creighton, was notorious for doing this. Fork, raise money, and dump SZN was in full affect late 2017/early 2018. We ended up with shitcoins piling into the market that were simply tokens with elaborate marketing schemes through the use of buzzwords.
This is what we asked for when we entered an open-software space (outside of Ripples trash closed software). Although I find most tokens in the space to be extremely useless long term, the horizontal growth has allowed to test use cases that might have validity. Everybody is searching for a unique take in a now, crowded space with various competitors. Prediction markets, the ability to access unused computing space, smart contract platforms, several different on-chain governance schemes. The market has expanded out to testing just about everything. This is the definition of a free market even though it was created through greed by most token fouders.
Why build on top of another token when you can create your own? Why not build up a massive reserve with multiple rounds of private funding with no SEC obligations to the tokenholders? Horizontal growth is now. Vertical growth is next. Bitcoin will soon eliminate the need of utility tokens with implementations of different layers. Lightning network is about to unleash “Satoshi’s OG Vision” (@ Bitcoin Cash) of micropayments. The most exciting part is not the fact bitcoin will be used for micro transfers but the world of possibilities bitcoin will be opened through a potential third layer. Lagged by slow throughput bitcoin will now be able to support to support larger applications on the third layer. Utility tokens will soon be rendered useless through better bitcoin dApps and eventually privacy will be built on bitcoin too.
This vertical growth has been forgotten thanks to the wealth alt tokens have created. In reality, we must create a better user experience that doesn’t require switching currencies when hopping from one whack a mole machine to the next. Vertical layer growth is next. No more shitcoinery please.
Dhruv's Bubble 