Every year since 2017 this blog awards the Crypto Tulip of the Year Award to the technology, company, organization, or people that best embodied the irrationally exuberant spirit defined by Satashi Nakamoto’s blockchain and cryptocurrency technology. The award also recognizes major crimes, blunders, and failures, and outstanding examples of Orwellian rhetoric.
Last year El Salvador won the award, recognizing their accomplishments (or not) in taking Nakamotoism to the next level: Tulip mania for a whole nation state. While El Salvador continues its “Bitcoin Experiment”, there have been plenty of other irrationally exuberant developments.
The whale in the room is the long, bitter “crypto winter” that continued through all of 2022. This year saw a crash of exchange rates, panics, and bankruptcies. The magic has faded, leaving behind a trail of very real losses.
Indeed, much of the crypto action has been on the downside, which, of course is always the second chapter of a Tulip Mania story, no? Where there is a pump, there is a dump. Creative destruction is followed by destructive destruction.
As my great Sensei, P., taught us, “What goes up, must come down”.
Since 2009, Nakamotoists have worked steadily to reinvent money and to recapitulate economic history. The result has been a long series of painful lessons that are already familiar to those of us who didn’t drop out of college.
Oh, that’s why banks are regulated! Oh, that’s why security trading is regulated. Oh, that’s why we have humans in the loop.
Reviewing this blog over they year, we see a pattern:
- El Salvador – the crash put paid to the wilder fantasies
- NFTs – the crash put paid to the wilder fantasies
- Stablecoins – the crash put paid to the wilder fantasies
In fact, we can sum up 2022 as, “the crash put paid to the wilder fantasies”.
So what did the judges select to honor from this gloomy year?
Special Recognition
First, let’s deal with the dead elephant in the room. This year we have created a new special award, the “Lehman-Enron TBTF Golden Ass Award”, to be awarded for the largest and most damaging crypto fraud of the year.
You don’t need me to tell you that FTX is the run away winner of the 2022 Golden Ass. Congratulations, SBF and friends!
As CZ tweeted to SBF, “stop doing everything”
A second special technical award was created, the “Math Versus Intuition Award”, which recognizes actually useful quantitative analysis. The MathVIntuition goes to:
“The Nakamoto Coefficient”.
This number is based on the estimated mining power of nodes, and reflects the minimum number of nodes that need to cooperate to execute a 51% attack. For the Bitcoin network, this number is something like 5—as few as five of the biggest miners could theoretically control the network! And Bitcoin is the largest and “most secure” from of all blockchains!
Essentially, these numbers indicate that cryptocurrencies have achieved the security of a centralized system with the inconvenience and inefficiency of a decentralized system. Congratulations.
The judges considered the “great unwind”, AKA, “crypto winter”, AKA what comes after irrational exuberence.
All The Pretty Tulips
The judges were spoiled for choice, as usual.
There were many, many, many hacks and scams.
This blog declared that NFTs jumped the shark in 2022 (and that was months before the Donald made his huge announcement).
The blog also commented that DeFi showed it’s true value this year
It was difficult to choose!
And the Winners Are…
Here are the 2022 Crypto Tulip of the Year winners!
Third Place: Non Fungible Tulips (NFTs)
It seems that NFTs are always a bridesmaid, never a bride. Last year, NFTs were the runner up, and you’d think that they were passe by now. But NFTs have more than jumped the shark in Nakamotoland, they have penetrated the mainstream, for better or worse.
What ever else you may think about Donald Trump, he does know a lot about hawking the merch. If this superhero of personal marketing thinks NFTs are an exciting opportunity, who are we to argue?
Runner Up: Ethereum 2.0
After many years, Ethereum 2.0 was finally deployed. This new version switched from classic Nakamotoan Proof of Work to a complicated non-Nakamotoan Proof of Stake protocol. The new protocol reduced electricity consumption, maybe by 90% or more.
However, the judges note that this change also made possible new mechanisms for enforcing regulatory bans associated with US economic sanctions, AKA Censorship. The protocol is not only non-Nakamotoan, Ethereum has begun to violate the core values of Nakamotoan blockchains. This was not uncontroversial, and led to firebreathing rhetoric, threats to split and/or secede from Ethereum, and a lot of very Nakamotoan fuss.
These were strong candidates. But this year’s winner, appearing for the first time in these awards is…
[drum roll please…]
Crtypo Tulip of the Year for 2022: Reality!
What! Huh? Who saw that coming?!
Nakamotoists have been talking for years about “going mainstream”. This year, cryptocurrencies, blockchains, DeFi, NFTs, and above all FTX went mainstream—in the worst possible way.
Millions of ordinary people lost a lot of money. And they lost money in every way possible. Deflating assets which had been pumped by celebrities. Stolen assets. Panics and bankruptcies. The works.
What used to be a nerdy joke, is now revealed to be a giant global scam. People are comparing FTX to Enron—this is not company you want to keep.
Sure, it’s not all fraud, but that doesn’t matter because there’s no way to know what’s legit and what’s not because it’s an unregulated wild west.
Oh, it’s real. Crypto is mainstream, now. It may never recover.
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