Here is today's chart - https://imgur.com/LRtUuMr
From an all time high on January 14th, the price of Ether tumbled and lost a third of its value in six weeks. Then it got cut in half in March. We’re now barely above the high set last June, and the new wallet numbers are firmly in last summer’s territory. It’s a bloodbath. Worse, it seems there is no clear rationale for it. How can we make sense of the crypto markets right now? What sense is there to make? Surely Ether is seriously oversold and heavily discounted right now? We should buy the dip, right? Right?
Keynes’s old adage that “the markets can stay irrational longer than you can stay solvent” has been much on my mind this week, as has Dan Kahneman, who unearthed the cognitive biases and put behavioural economics on the map. Kahneman showed that “rationality” is not always what orthodox economics supposes, and worse (for orthodox economics), “irrational” behaviour sometimes makes perfect sense when considered from a different point of view. Fear is a strange motivator.
Perhaps this is the bottom. It certainly ought to be. But this is crypto. Normal rules of rationality don’t always apply (let’s keep that in mind when the next boom arrives). We should be prepared for the possibility that this market “irrationality” will last a while longer yet. The new wallet numbers have flattened out, but they support a price in the region of $400—about where we are. The slight lift in transactions we saw last week have fallen back a bit. Hard to tell if this is the turning point in a long-ish transaction cycle or another false dawn. Most troubling of all are the reports/rumors of ASIC mining rigs being developed for the Ethereum chain. If these units really are being built, and deployed, they would render most GPU miners uneconomic at a stroke, with unknown consequences for the blockchain and the Ether price. On the other hand, given that the switch to Proof of Stake is slated to get underway later this year, and the cost of developing an ASIC is decidedly non-trivial, why would anyone spend a fortune developing kit with such a short shelf life? Whatever the actuality may be, the mere rumor is probably affecting the ETH price to some degree.
So what needs to happen for the pain to stop? Ideas below please. To my mind, it’s all about infrastructure. The single most important thing is the shift to Proof of Stake, and the introduction of sharding. Improved user interfaces are also much needed—surveys show that a lot of people are put off by the perceived complexity and difficulty of crypto (Vinay Gupta is excellent on this point -- https://www.reddit.com/ethereum/comments/7x5koc/blockchain_beyond_bitcoin_with_vinay_gupta/
). The application layer will become central, but not yet. If someone develops a “killer Dapp” today, there isn’t the bandwidth for it to go global right now. And as Nick Cannon says, with the best will in the world, a popular Dapp is a year away at least -- https://ethereumprice.org/when-is-the-next-cryptocurrency-bull-run/
Capacity, with security, is the crucial thing this year.
Good luck and go well.
I’ve told this story before, but somehow the sales figure “$133.20” has yet to be burnt into the history of Blockchain from now unto the end of time. Webpage version
, with working links for all the references. Others had already been thinking along blockchain lines. Imogen Heap has been recording through major labels for a couple of decades now, and, in the course of a string of chart albums and Grammy nominations, has experienced quite her share of the music industry’s duplicitous incompetence, and wants something better.
In late 2015, Heap introduced Mycelia, running on the Ethereum blockchain. Her motivation was to cut through the tangle of bad deals and obscure rights the record industry offered. She found herself free of previous deals, and so released her new song “Tiny Human” as the test case. “Its success will come from the adoption of millions of music lovers.” (1) Mycelia worked with Ujo Music, an attempt to automate the back-room disbursement side put together by Ethereum development company ConsenSys, whose Vinay Gupta had first told Heap about smart contracts.
Heap’s explicit goal is to have all music you’ve “bought” (not just hers) behave as spyware: (2)
We know less about what our songs get up to once they’ve left ‘home’. What would I like to read on these postcards from our songs? Well, how many times it was played, by who and where would be a great start. The last Imogen Heap release with spyware was the 2005 Speak For Yourself CD with Sony’s rootkit malware, an initiative that didn’t go down so well then either.
The press coverage of Heap’s new initiative was vast, and her name is still routinely brought up whenever blockchaining the music industry is mentioned. What I’ve yet to see anyone mention is how well it did in practice. Total sales of “Tiny Human” through Ujo Music on the Ethereum blockchain were … $133.20. Not $133,200 – but one hundred and thirty-three dollars and twenty cents. (3) It literally got more press pieces than sales. It was taken off sale some time in 2016. (4)
It didn’t help that purchasing it was almost impossible for an ordinary human music fan. You went to the page, clicked “Download”, followed the instructions to create an Ethereum wallet, and went off to a Bitcoin exchange to buy bitcoins then exchange those for ether, as ETH wasn’t widely traded directly to dollars at the time. Getting hold of the Bitcoins required you either to send a pile of government identification to an unregulated exchange, deal with crooks or both. Once you’d done all this, you got a download key. The process was also ridiculously glitchy and buggy. “The exact ether amount is a bit of a gamble.” (5)
Ujo Music later posted a rambling nonexcuse for the “Tiny Human” disaster, in which they admitted that they’d only researched what the hell they were doing after they’d done it. As they put it: “we are but a few bright-eyed technologists with a special hammer, looking for the right nail.” (6)
You’d think that at that point Heap would be wishing she’d just put it up on Bandcamp, but she’s still pursuing the blockchain dream and selling others on it, particularly the Featured Artists Coalition, i.e., the stars who did quite well out of the old major label system and would like to keep something that works like that. Never give up!
A record shop needs not to be harder to use than a BitTorrent client. iTunes, Netflix and Spotify made it big by being more convenient than piracy, and there is nothing convenient about dealing with blockchains. For buying music online, Bandcamp has all comers beat for a convenient record shop experience that delights both buyers and sellers, pays 85% to the artist and doesn’t have any use for a blockchain.
1 George Howard. “Imogen Heap’s Mycelia: An Artists’ Approach for a Fair Trade Music Business, Inspired by Blockchain”. Forbes (contributor blog), 17 July 2015.
2 Imogen Heap. “What Blockchain Can Do for the Music Industry”. Demos Quarterly #8, Spring 2016.
3 Screenshot of payouts as of August 2016, uploaded by me 6 November 2016.
4 Screenshot of the Ujo Music purchase page for “Tiny Human” when I clicked “Download” in August 2016.
5 andrewkeys. “Purchase Imogen Heap’s “Tiny Human” with Ether on ConsenSys project, Ujo, the decentralized peer-to-peer music platform!” Reddit /ethereum, 3 October 2015.
6 “Emerging from the Silence”. Ujo Music blog, 29 August 2016.
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