In a bustling coffee shop in the heart of Beijing, there's over a 50% chance you'll hear someone talking about blockchain. Wan Yang, a 90s-born tech development head at a mid-sized token trading platform, often finds himself exasperated when the topic comes up. The hype around blockchain has reached fever pitch, especially after the surge in Bitcoin’s value and the attention from venture capitalists in early 2018.
Despite regulatory crackdowns on initial coin offerings (ICOs), the enthusiasm for blockchain hasn’t waned. Many are still drawn to the promise of quick wealth, with some even confusing blockchain with Bitcoin itself. According to a report by the 21st Century Business Herald, the frenzy is fueled by both innovative ideas and speculative greed. However, the gap between real-world applications and token issuance remains a paradox that many struggle to bridge.
In WeChat groups and online forums, discussions about blockchain are everywhere. Startups and media outlets have emerged, suggesting that the trend isn't dying down. But why has blockchain suddenly exploded? Even seasoned experts are unsure. Some researchers, who have spent years working on distributed systems, have jumped into the blockchain space, hoping to capitalize on the wave.
Wan Yang believes the root of this boom lies in Bitcoin’s meteoric rise. From $0.0025 in 2010 to $9,000 in March 2018, Bitcoin has grown by over 3.6 million times. Its properties—like being digital gold and infinitely divisible—have tested the feasibility of blockchain technology. “Bitcoin’s success proves that decentralization can solve credit issues,†he says.
While feasibility doesn’t equal commercialization, the rapid growth of Bitcoin and other tokens like Ethereum and Litecoin has attracted many to seek their own fortune. Today, many in the industry admit that the most successful use of blockchain so far is speculation.
Still, many practitioners see blockchain as the foundation for the next generation of internet infrastructure. Wan Yang, who had no prior knowledge of blockchain, came to the platform to learn and eventually develop his own project. He believes the current expectations for blockchain exceed its current capabilities, but he remains optimistic about its future role in communication networks.
“Without tokens, who would contribute to the network?†he asks. “Just like the internet has its protocols, the future of decentralized networks will rely on tokens. As demand grows, scarcity will make them valuable.â€
However, when asked how to increase application demand, he remains vague. “It depends on what people actually need,†he says.
Not everyone is driven by innovation. Some are motivated by the potential for quick profits through ICOs. Despite two major cleanups in 2017 and 2018, many project sponsors continue to operate through offshore platforms, catering to domestic investors.
According to an industry insider, many ICO projects are essentially scams. “There’s a lot of money involved, but it’s unregulated and hard to control,†they say. Statistics show that over 80% of ICOs launched this year have failed.
Senior investor Yang Jingyuan argues that token prices are more about popularity than technology. “I think almost 100% of coins are air drops without real use cases,†he says. “The real value comes from brand recognition, not the underlying tech.â€
This bias toward popularity has led to a growing influence of media and trading platforms in the blockchain space. “We promote well-known figures and push projects aggressively,†says Tong Feng, a blockchain media head. “New media projects emerge weekly.â€
“The blockchain media business is easy to profit from. It’s like doing roadshows for illegal projects,†Tong adds. “If the media is in the right place, even small tokens can gain value.â€
Finally, the big players are the trading platforms. “Going live costs millions, and it’s like an IPO,†Yang Jingyuan says. “Everyone is chasing investor money, even though they know the risks.†“I was lucky, who would have thought I’d be the last one?†he laughs.
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