The data problem of cryptocurrency: Rebuilding trust in an untrustworthy environment

We had been analysing Web3 data incorrectly. Over the past few years, the methodology—or lack thereof has given rise to a sector with a high level of speculative activity. Every protocol has a unique means of measuring its own economic activity. It is almost impossible to make an apples-to-apples comparison between various networks.

DeFi can only be evaluated using total value locked (TVL), which is readily exaggerated and solely considers liquidity. Supporters of Web3 emphasised the inherent value that blockchain was creating for the coming economy. Without comprehending the benefit or the reasoning, the critics referred to the hoopla and froth. Both were accurate. Building fundamental value was going on. However, venture capital and small-time investors flooded the market, driving frenetic expansion based on token economics.

And now, here we are, in an industry that feels like it is in disarray, that feels unsettling, hazardous, and worthless. We have all been fumbling in the dark, which is why it feels that way. We had been viewing Web3 incorrectly. In order to determine production value, we used price, which is a biassed yardstick. The criteria employed to assess the general health of a token, or even an entire industry, have distorted the situation. A project’s utility and feasibility can be misrepresented by manipulating a coin’s market capitalization, trading volume, and social media traction, artificially driving up token prices and deceiving investors. That tale was not original.

how blockchain functions and are not flaws in the present blockchain apps.

These problems are fundamental to how blockchain functions and are not flaws in the present blockchain apps. The entire socio-technical system must be taken into consideration in any evaluation of the system’s security. Too many blockchain proponents only pay attention to the technology, ignoring everything else. People don’t utilise bitcoin because they don’t trust it, to some level. That is unrelated to the protocols or the cryptography. In actuality, a system where you risk losing your whole savings if you misplace your key or download malware is not very reliable. No amount of explanation as to how SHA-256 avoids double spending will change that.

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