30 Crypto/Blockchain Criticisms

Random Observation/Comment #735: Every technology has its critics. It just so happens the crypto industry is disrupting traditional banking infrastructure and some powers that be would rather keep this a cartel.

Why this List?

Criticisms are always welcome as new products and features will be incremental in the crypto space. Many thanks to the ConsenSys marketing team (esp James B and Coogan) for starting this discussion internally.

  1. Scams are creative and rampant – Never share your private keys!
  2. Gas fees on Ethereum are too damn high and do not promote standard retail inclusion.
  3. Proof of Work is still using a country’s worth of power annually.
  4. There’s still a high barrier of entry for education in the new user experience with MetaMask and wallets. The conveniences of forgot password and customer service are not always available.
  5. Dusting attacks via Airdrops to any public addresses are dangerous – It’s like getting sent spam from emails. If I am a custodian, why can people give me something for me to custody? What if there are tax implications?
  6. I have to add tokens to my MetaMask account in order to view my balances. This is being addressed in upcoming features, but also has been delayed due to these dusting attacks.
  7. DeFi governance is sparse in participation – There’s transparency in their proposals and votes, but as with all democracies, there’s not enough attention to detail.
  8. Governance token launches look a lot like equity for early supporters to cash out.
  9. Most of the $370B volume of NFTs is speculation despite it gaining so much mainstream attention over the last year.
  10. Operational costs for funding contracts are not as predictable with variable/volatile prices. Take a look a Infura ITX and their gas station for your enterprise deployments.
  11. Testing in production is not okay – There’s always some disastrous bug or rug pull in the making. Luckily most pools that start new financial primitives have ways of limiting trading exposure.
  12. DAOs are cool, but they look at lot like well-organized Star Trek fan clubs from the 80s.
  13. The space is so new, there’s no guide or clarity on legal procedures for DeFi
  14. Most smart contract audit services are booked 6 months out.
  15. Blockchain developers across the board are still super expensive resources with a high margin taken by headhunters.
  16. Sprinkling of Blockchain, DeFi, and NFTs seems to be overly marketed as products for Enterprise adoption.
  17. Regulations are trying to fit these digital assets into categories (securities, commodities, or currencies) instead of creating a new category.
  18. Regulations labeling of “brokers” is so vague that any platform or participant can become liable.
  19. Enterprise blockchain projects do not embrace the change of their “agent” roles in a new shared system and economy.
  20. Market manipulation is real and can be easily propagated by influencers and FUD narratives. As expected, here’s my 30 Crypto FUD narratives.
  21. All media coverage about cryptocurrency focuses on short term price action and encourages trading instead of investment.
  22. NFT market making is done by bots creating new base floor prices that are pretty ridiculous.
  23. NFT marketplaces are still split by niche markets and targeting of creators making early partnerships. This will likely lead to “acquisition” deals of creators moving between platforms like Joe Rogan signing deal with Spotify exclusively (but receiving millions of fewer views/listens).
  24. Since everything is tied to financial gain, the “search” for the next penny stock and undiscovered artist is becoming more of these blanket bets (not necessarily backed by talent or company vision).
  25. The old money laundering tricks with art and art valuations are clearly being used for NFTs. New floor prices and grooming of artists and investors.
  26. There are too many maximalists and zealots tied to price and adoption.
  27. Not enough of the old school web2 developer communities joining web3 leave their egos at the door.
  28. There are times when you take a step back and say “man, this is shady.”
  29. It’s easy to fall into a mental a trap of participating with fake internet money when $100 gas prices for swaps calls are ridiculous.
  30. Staying involved with the space is a full time job of scouring across discord channels, telegram chat groups, and tweet storms. I’m constantly reading and sifting through whitepapers – take a weekend off and you’re already behind.

~See Lemons be Critical of Crypto