It has been a shambolic few days in the world of crypto, as everything suddenly seemed to break at the same time, and volleys of FUD were dispatched.
Well, what’s new? The cynical observer might ask. Wasn’t crypto always this way?
After months of substantial indicators that crypto was edging towards respectability and mainstream adoption, perhaps we were due a chaotic refrain, as a reminder that crypto still has a long way to go, and to provide some spectacle in the process.
Crypto is, after all, not supposed to be the middle-of-the-road, establishment choice, and so sure, why not? Let’s remind conservative investors that it likes to blow up now and again.
At this point, it should be mentioned that if you’re not into crypto, but are, on the other hand, into Bitcoin, then you’ll be sitting back and laughing, because Bitcoin works just as well as it always has.
So if not Bitcoin, then what went wrong?
First, there’s Ethereum , and what has rapidly become the gargantuan mega-project lording it over the NFT space: Bored Ape Yacht Club. Or rather, we should talk about Yuga Labs, the organization that created the Bored Ape Yacht Club.
Yuga carried out its highly anticipated Otherside metaverse land sale, and it was a mess. First, you had to buy ApeCoin to make a purchase. That’s the coin Yuga itself created and airdropped to its NFT holders, and which pumped in price and then dumped, either side of the Otherside land sale.
The worst of it, though, was that gas fees soared, with buyers paying between $4000 and $10,000 in ETH to get a transaction through, on top of the 305 APE (around $5,800 at the time) price tag for the NFT itself.
Actually, that’s still not the very worst of it, as there were also would-be buyers each paying thousands of dollars in gas fees just attempting to get a transaction through, and then subsequently finding that the transaction had failed, the gas fee was spent, they hadn’t purchased an NFT, and the ApeCoin they’d acquired at an inflated price to make the purchase was about to devalue.
In total, the Otherside drop burned almost 64,000 ETH in gas fees, which is equivalent to around $175 million being extracted for transaction costs.
If you don’t like NFTs or have been warned about their reckless nature, then you might not have much sympathy, but, while individual investors must take responsibility for their own actions, and there is no shortage of alpha to let you know that NFTs are the wild west, it’s fair to say Yuga should have done better here, either through properly optimizing its smart contract , or simply devising a better method of distributing NFTs.
What’s more, Yuga was interpreted as having implied that the fault lay with the Ethereum network. This is, in a sense, partly true, but knowing of Ethereum’s faults, Yuga might reasonably have been expected to work around potential problems, rather than drive headlong into them at top speed.
That said, on the positive side, Yuga also stated that it would be refunding lost gas fees to those who attempted to mint and had their transactions fail.
One of Ethereum’s competitor blockchains is Solana, which has its own lucrative and expanding NFT ecosystem, and is touted as a faster, cheaper network on which to build decentralized applications.
However, generously taking some heat off Ethereum and Yuga Labs, Solana chose this weekend as the moment for its entire network to crash out of action for around seven hours. It’s not the only time that Solana has gone down, in fact, it’s the seventh outage this year, but on this occasion the timing was impeccable, leaning perfectly into the unfolding crypto farce.
Arguably, a network that simply doesn’t work is better than a network that burns your money in return for nothing, so take your pick.
Speak to a Bitcoin maxi, and they won’t care about any of this, as it’s all just evidence of what they’ve been telling you all along: crypto is a sideshow, and the only thing that matters is Bitcoin.
There was further good news for Bitcoiners when Warren Buffett told the Berkshire Hathaway shareholders’ meeting that he wouldn’t buy all the bitcoin in the world if it was offered to him for $25, while Charlie Munger described Bitcoin as, among other things, “evil.”
Why is this good news to a Bitcoin maxi? Because Bitcoin is not supposed to make the establishment, as represented by figures like Warren Buffett and Charlie Munger, feel comfortable, it’s supposed to present an alternative and cause disruption.
Also, ask the average punter on the street which could more accurately be described as evil, the financial establishment, or a peer-to-peer digital currency, and it’s a fair bet that a majority would opt for the former.
Ultimately, though, this weekend of chaos and hyperbole will not derail the blockchain locomotive as we head towards greater Bitcoin and crypto integration.
There will be repercussions from the Otherside land drop, as it’s not acceptable for projects to be this negligent on the scale that Yuga now operates, but NFTs are here to stay, and Otherside land NFTs have been trading at high volume on the secondary market.
Ethereum will continue on its journey towards scaling solutions of its own, and though the Merge is delayed, it’s not the mythical McGuffin that it’s sometimes made out to be.
Beyond Solana, challengers to Ethereum’s dominance, such as Cardano and Avalanche, can make the case that their networks will neither crash out at important moments nor burn a substantial chunk of your crypto pile in gas fees.
And as for Bitcoin? It works, it’s the real thing, and it stands apart from the complications and confusion around, basically, everything blockchain-based that is not Bitcoin.
Furthermore, as has been the case since its inception, Bitcoin is impervious to attack, including, or perhaps in particular, criticism originating out of the very establishment from which it offers freedom.
