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As new coins continue to flood the crypto market, PEPE memecoin rises in value and is now among the top-ranking cryptocurrencies. Much anticipation surrounds the Pepe (PEPE) ecosystem as the memecoin ascends to new heights. Investors who acquired the…

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Risicovolle cryptotokens lokken beleggers met populaire thema’s als goud en kernenergie. Lees hier waarom experts ETF’s vaak verstandiger vinden.

The Pleb Economist #5: Shitcoins are part of Bitcoin's Gartner Hype Cycle So, this is outside my usual wheelhouse of economic analysis, but a recent post (https://stacker.news/items/907254) bemoaning Trump's shitcoinery and the press's lumping together of Bitcoin with "crypto" got me thinking back to the history of shitcoinery, starting with the explosion of cryptotokens and NFTs in the late 2020s and 2021, up through the implosion of FTX in 2022. It occurred to me that we can understand shitcoinery as a consequence of Bitcoin's natural evolution along the Gartner Hype Cycle. But my thesis is more nuanced than simply saying that shitcoins were the result of hype. Rather, I want to propose a theory for how Bitcoin and "crypto" got lumped together, why it might have made sense at first, why some people still lump them together, and where I think this is all headed. Read on for more. The Gartner Hype Cycle The Gartner Hype Cycle is a theory developed by American consulting firm Gartner, which purports to explain how new technologies mature over five phases. The five phases are: Technology trigger. A scientific or methodological breakthrough triggers the birth of a new technology. The technology holds much promise for new products or new solutions. Many early phase proof of concepts are developed. There is much excitement in the early adopter communities, but regular people and the mainstream press are mostly unaware of these developments. Peak of inflated expectations. The early proof of concepts show promise. More and more people learn about the promise of this new technology. The mainstream media catches on. Investment capital flows into the industry. The number of projects experimenting on different use-cases and technical improvements explodes. Some of these projects are legitimate but others are grifts. Startups are formed and early companies in the space become household names. Trough of disillusionment. Technical and commercial challenges, over-investment of capital, over-promised and under-delivered expectations, all lead to the failures of multiple projects and startups. Investment capital dries up. Interest in the technology wanes and the mainstream press regularly declares the technology dead. Yet, there remains a core group of believers who continue to develop the technology and focus on the most promising use cases. Slope of enlightenment. Now that the bad ideas and the grifters are shaken out, the remaining community can focus in on the best ideas and most promising use cases of the technology. They gradually learn what works and what doesn't work, and a natural growth curve emerges as the technology improves due to the natural feedback between user and developer, free from the wild expectations of the hypemen and hucksters. Plateau of productivity. Most of the technical wrinkles have been ironed out. Best practices have been established. Use cases become well defined and demonstrated. Mainstream adoption continues to grow, and development will focus less on technical specification and more on bringing products to market. Criticisms of the Gartner Hype Cycle The Gartner Hype Cycle is not an academically rigorous theory. It does not have a long literature back-testing it against the historical experience of other technologies. In fact, articles have been written about how it fails to explain the adoption curve of some technologies. Nevertheless, the Gartner Hype Cycle has achieved its place in the popular imagination. And even if it's not that well established by historical data, I think its categories are helpful for thinking about the dynamics of hype and disillusionment in the growth of any new technology. Bitcoins, Shitcoins, and the Gartner Hype Cycle So, how does the Gartner Hype Cycle apply to Bitcoin ahd shitcoins? I propose that shitcoins can be understood as a consequence of Bitcoin's natural evolution along the Gartner Hype Cycle. And more specifically, I propose the following theory for the history of shitcoins: Shitcoins were, initially, either A) failed attempts to solve Bitcoin technical challenges, or B) misunderstandings of the appropriate use cases for Bitcoin technology. Examples of (A) include Proof-of-Stake and all the other coins purporting to solve Bitcoin's energy "problem". It would also include Monero which aims to solve Bitcoin's privacy "problems". The key point is that many alt coins were originally developed purporting to address a real technical challenge relevant to Bitcoin's design. Examples of (B) include NFTs, Ethereum's attempt to become a distributed computer, and drivechains. These are alt coins developed with the purpose of extending the concepts behind "blockchain technology" to use-cases beyond money. Because shitcoins were originally attempts to solve technical challenges or extend use-cases, they acquired an air of legitimacy. They became thought of as experimental projects that extended or improved Bitcoin, and thus fell into the same technology category as Bitcoin. This is the origin for why Bitcoin and crypto are lumped together; because that's how many of the project founders and early investors originally thought of it. I should remind everyone that during that time, everyone was hyping "blockchain technology". The idea of Bitcoin as sound money was taking a backseat to "blockchain". Because shitcoins came about during the peak of inflated expectations, they made early investors filthy rich. This not only meant that they had an air of legitimacy, it also meant that they had an air of genius to them as well. The next thing that happened was that these projects failed. They over-promised and under-delivered. NFTs are a case in point. They promised a new means of transacting digital art, but it was never properly specified why proof-of-ownership matters for something that can be freely copied and distributed. Ideas like decentralized computing also failed because it was never clear why decentralized compute cycles mattered for use cases outside of money. As to proof-of-stake, it was a misspecification from the very beginning, because Bitcoin's energy use was never a technical problem. It was a solution to the sybil problem in the first place! Instead, proof-of-stake only increased the self-referential nature of these shitcoins. Not only did these projects fail, but they also attracted a large number of copycats who weren't interested in solving Bitcoin technical challenges or extending use cases. Rather, the objectives of these grifters was to capitalize on the hype cycle and make themselves rich. They learned to speak the jargon that would cloak themselves with the same air of legitimacy and genius that other shitcoin founders had, but they had none of the original vision or technical chops to back that up. The result of this is that the crypto ecosystem became a game of musical chairs, or ponzi scheme to be more blunt about it. A major turning point happened with the collapse of FTX. In the minds of many people, this revealed that the crypto ecosystem was a ponzi scheme. But the mistake people are making is that the collapse of FTX had nothing to do with Bitcoin. It had everything to do with A) the failed projects that were misguided attempts at fixing/extending Bitcoin, and B) the copycat shitcoins that were never more than a grift. Unfortunately, regular people and the mainstream press do not yet understand that. They still associate crypto with Bitcoin because of the history of shitcoin development and the jargon which has seeped into mainstream consciousness. What will happen moving forward? I think people will gradually begin to disassociate crypto with Bitcoin. Because there hasn't been a legitimate blockchain project that has gained any sort of mainstream attention since FTX blew up. Outside maybe a few lost souls, almost everyone understands that $TRUMP and $HAWK are nothing more than a memecoins, get-rich-quick schemes for those who want to gamble on finding a bagholder to dump on. But the air of legitimacy on any new coins is completely gone. The time between the pump and the dump is getting shorter and shorter. Some of the older coins still have an air of legitimacy, but I believe that the interest there is slowly waning as well. As far as I can tell, nothing is being built on Ethereum except more ways to trade memecoins. The thing is, politicians, journalists, and normies are slow to catch on. Their knowledge lags reality, sometimes by a lot. So they are still in a mode of thinking where Bitcoin and crypto belong to the same category. Thus, they either view all as scam or all as legitimate. But they haven't learned to discern the difference between A) Bitcoin, B) failed blockchain projects, and C) actual scams. I believe they will, in time. All that being said, I think for "crypto" as a whole, normies are currently in the "trough of disillusionment", but real Bitcoiners are on the "slope of enlightenment". That's because we've seen and learned from all the failed blockchain projects. We've explored some of those misguided use-cases and realized that Bitcoin is first and foremost a monetary technology, and should stay that way. Being now enlightened, we can focus on building products aligned with the idea of Bitcoin as money, without getting distracted by other things like decentralized computing or proof-of-stake. Conclusion To summarize, I think that shitcoins became associated with Bitcoin because they were, at first, genuine but misguided attempts to extend Bitcoin or address technical challenges. However, their success at attracting capital resulted in copycats and grifters. There are thus three categories: Bitcoin, failed blockchain projects, and actual scams, but regular people and the media cannot distinguish between the three. I believe that, over time, more and more people will learn to see the difference. Regular people are therefore in the "trough of disillusionment", but Bitcoiners, having learned the lessons from failed blockchain projects, are in the "slope of enlightenment" and can now focus their efforts on projects that align with Bitcoin's core use case as sound money. What say you? Are you as optimistic about Bitcoin as I am? Or would you disagree with my characterization? Have Bitcoiners really learned the lessons from failed blockchain projects? Or will we see this cycle play out again, but this time on Bitcoin Layer 2? Let me know your thoughts in the comments! Previous Pleb Economists Pleb Economist #4: I orange pilled my class today https://stacker.news/items/899199 Pleb Economist #3: On the political economy of blocksize https://stacker.news/items/875560 Pleb Economist #2: Politics is Provably Hard https://stacker.news/items/849906 Pleb Economist #1: The Art of Economic Communication https://stacker.news/items/839278 : The Pleb Economist is a weekly (not quite) weekly whenever I feel like it column where I share my thoughts as a mainstream economist who is slightly jaded by mainstream economics. I also have a somewhat libertarian and rebellious bent, as well as a deep conviction in the utility of Bitcoin. : I tried searching SN to see if anyone posted about this before, and couldn't find something immediately, so I apologize to anyone who had posted about this previously and I didn't cite. [6 comments]

The Crypto market is facing a brutal reality check. Millions of tokens launched over the past four years are now defunct,