The Internet bubble is over, the future will belong to the era of encryption on the chain

Article written by: YANCEY STRICKLER

Article compilation: Block unicorn

Cryptocurrency is dead, and only a few will lament it. Now that the bubble has burst, the real revolutionary work can begin.

In 2022, people witnessed the collapse of the cryptocurrency world.

Outside of those unfortunate enough to have lost large sums of money during the pandemic or had their Twitter avatars hit by retinoids, few people are mourning the decline of cryptocurrencies. Its excesses have become an expensive, grotesque living example of fraud and empty money (assets with no real backing) in recent human history.

This period and mania cannot last forever, and it does. The era of cryptocurrencies is now drawing to a close. Not because of SBF (although he did contribute), but because of the accumulation of many things we are all familiar with: the wild price fluctuations of cryptocurrencies, which make it almost impossible to use as a practical currency; Financial control; everything is securitized;

The end of the cryptocurrency era was marked by another big event: the incorporation of a new, proof-of-stake-based version of Ethereum. This evolution created cheaper, less energy-hungry infrastructure and ushered in a new chapter in blockchain history: the on-chain era.

Cryptocurrency Era

The era of cryptocurrencies began with the release of the Bitcoin white paper in 2008 and ended in September 2022 when Ethereum switched to a proof-of-stake verification model.

The era of cryptocurrencies is characterized by the creation of blockchain technology visions and their first applications: cryptocurrencies, especially Bitcoin and Ethereum.

The benefits of the cryptocurrency age include the invention of the blockchain and the widespread dissemination of the ideas behind it; the creation of new forms of digital value; and the power to reshape institutions and financial norms.

The defining products of the crypto era are cryptocurrencies themselves — cryptocurrencies, crypto infrastructure, crypto investments, crypto organizations, and finally, infrastructure derivatives like non-fungible tokens (NFTs).

The downside of the cryptocurrency age is that human greed is amplified through cryptocurrencies - Ponzi schemes, scammers, charlatans, and endless hype creating and inflating assets on a massive scale, sometimes even using illicit means.

The eventual collapse of cryptocurrencies will be mourned by few except those directly affected, and cheered by almost everyone else. The Age of Cryptocurrencies: 2008 - 2022 (Rest in Peace).

On-chain era

In September 2022, Ethereum successfully switched to the proof-of-stake model, which significantly reduced its energy and financial costs, making Ethereum for the first time close to a practical (rather than theoretical) world computer. With this merger, the on-chain era began.

The on-chain era will be defined as the period when most of the world's innovation and cultural output, shared history, and information infrastructure are built, stored, and accessed on-chain.

The benefit of the on-chain era is that it empowers individual users and user groups to maintain digital sovereignty, they can move freely between various markets and spaces without being trapped in a single platform, and they can control their own Works, data and background. This allows creators, consumers, and institutions of all kinds to securely connect to each other and access critical information in far simpler and more powerful ways than the siled systems of the past and present.

The defining product of the on-chain era will be that digital histories and identities become safer, more useful, and more centralized — but also more decentralized than ever before, ending the real killer app of Web2: Platform locked. A work or content minted on-chain will establish provable origin of the source of that information or work; distribute the work through a shared ledger of a public blockchain; store and maintain it through a decentralized network of computers and codes; and allow It is useful throughout the web and in our daily lives.

The downside of the on-chain era will be the limitations of the blockchain itself. How Much Can Blockchain Scale? How fast can they go? How cheap can it get? Can they handle larger amounts of information? How complex can decentralized applications get? What about zk proofs? And, as usual, there's the question of getting started.

For consumers, the convenience and sovereignty of an on-chain system is the killer app, not someone's hyped currency promising that if all goes well, it might be worth something someday. In the age of cryptocurrencies, all the noise is aimed at increasing the use of cryptocurrencies. In the on-chain age, the goal will be more practical and useful: make information more persistent and permanently accessible.

The cryptocurrency era has sustained itself on sometimes deceptive promises of future utility value, and the on-chain era will create utility now and in the future.

Technological Revolution and Financial Capital

Image credit: Carlota Perez, The Technological Revolution and Financial Capital (UK: Edward Elgar, 2002)

The idea that blockchain infrastructure might be going through different phases is not just a narrative device. Past technological revolutions have experienced similar patterns. In Technological Revolutions and Financial Capital, the British-Venezuelan economist Carlota Perez observes an important evolution of technological changes: they occur in stages, and bubbles often create practical applications at a later stage .

In the railway age of the 19th century, local crowd-funded investments in the construction of regional railway lines based on their technical potential came with the promise of great wealth. Almost all of these projects failed, leaving the terrain littered with useless railroad tracks and leaving the true believers in the area devastated.

These entities eventually learned that simply building a rail line was not enough. Events, business and industry are needed to provide support. None of that, it was (say with me) too early then.

Then, Perez observed, another generation of entrepreneurs and projects took the infrastructure built during the bubble and started using it. The core rail infrastructure got cheap enough, and there were enough rails, that they started to have practical value. Perez found that bubbles often create markets, just not in the way the original promoters imagined, and certainly not on the timeline they falsely promised.

It's worth noting that Perez's book was published in 2002, before the Internet's weakening and late recovery, the Internet itself at a stage of development that was strikingly similar to what her model predicted.

Railway and Blockchain

So what does this mean for the end of cryptocurrencies? How is the blockchain like a railway? These are the questions Odd Lots' Joe Wiesenthal recently posed in a tweet and an excellent podcast episode. His own answer lays out a few things — all financial, all representative of the age of cryptocurrencies — but it doesn’t come across as forceful.

Does blockchain have railroad-like utility? What infrastructure of the cryptocurrency era is actually useful for the new era of innovation?

It's not complicated: it's the blockchain itself. Blockchain is an invaluable and increasingly useful and usable infrastructure for preserving and transferring information, assets and ideas.

With on-chain storage, information acquires a provable provenance, identifying its origin, its collaborators and supporters, and its context in a permanent and publicly accessible manner without the need for any institutional approval or maintenance. This system of independent verification and dissemination of knowledge – whether it is an idea, artwork or personal information – is truly revolutionary. The way kids see the internet as a magical, unique all-encompassing thing is not far off the experience that the on-chain era will bring.

Making information provable, infinite, and built in a shared public database sounds a little fun, but it's mundane most of the time — hardly worth the culture battle over it. As the cryptocurrency era fades from memory and its excesses and frauds continue to be revealed, the on-chain era that is running in the background will grow.

**In Web 2, publishing information and ideas generates content. In the on-chain era, publishing information and ideas will make history. **

Today, a project I co-founded called Metalabel released a new product to share our thoughts on creative work in the on-chain era: a new format called "Records". Records are digital containers for creators to release and sell versions of their work, and can contain any creative medium (art, writing, music, performance, video, design, games, ideas, etc.) and any form of creation (physical, digital, conceptual ephemeral, live, exclusive, popular and niche). Once purchased, the record lives on-chain forever, so creators don’t lose their creations (or collections as backers) even if the platform disappears or changes hands. For us, this is what an on-chain product looks like.

Zora is working to bring culture to the chain, and we are not alone in doing so. The growth of Sound.xyz, the many creators who have begun cataloging their work on-chain, and countless other projects are examples of the transition to the on-chain era.

In the future, such projects will not talk about cryptocurrencies. They'll talk about information, media, and other digital elements being secure and portable because they're on-chain. As a result, we will be more in control of our digital lives. Our identities will follow us the way we want, not the way Facebook and Google want. We will pay for these services not only with cryptocurrencies, but also with credit cards and digital options. It may not be perfect, but it will be more convenient than the maze of usernames, passwords, and account numbers everyone is dealing with these days.

In the end, this new era will thank cryptocurrencies for getting us here. The past decade led to a gigantic bubble that has now burst, and it also paved the way for an extraordinary future.