Bitcoin Gold


                    
                    Greed, irrationality and anxiety have contributed to chaos in the crypto market. Investors should work on self-improvement if they want the industry to succeed. 
                    In 2021, it seemed as if 10 new Disneys — and the next 20 Picassos — were emerging from blockchain and various nonfungible token (NFT) collections.Exorbitant NFT values that year signaled strong belief in many projects. But two years later, those “next Disneys” have delivered little. The situation has created significant market frustration and disillusionment among investors and enthusiasts alike.Project failures are often attributed to founders. Yet, the greed, anxiety, and irrationality prevalent among Web3 participants have also played a substantial role in the ecosystem.Related: 3 theses that will drive Ethereum and Bitcoin in the next bull marketWe’re in a complex environment where even the most skilled and visionary founders find it challenging to navigate the market dynamics. This often leaves a trail of unfinished projects and unfulfilled promises, further eroding trust in the sector.The detrimental impact of greedImagine a party with tickets priced at $100. Someone eager to attend with friends misses the initial sale. Turning to the secondary market, they pay $500 for a ticket.The likelihood of disappointment is high since the event intended to offer a $100 experience. With a $500 ticket, expectations are inevitably higher, which often means the experience doesn't match reality.In the crypto market, this greed-induced frustration is apparent. You can pay 20 Ether (ETH) for an NFT that initially sold for 0.5 ETH, but it is essential to align your expectations with the 0.5 ETH value. (That’s especially true considering how Web3 royalties have declined, a situation that has also prevented founders from obtaining the benefits of high-value secondary sales.)Place your mental emphasis on the first price you see for an item — instead of taking the full context into account — is known as anchoring bias, where initial information heavily influences later decisions and perceptions. That means buyers view the high price of NFTs they purchase as an "anchor" for their expectations regarding utility leading to a cycle of disappointment.Anxiety also creates a problemDeveloping a quality product takes time. But the market often expects unrealistically quick progress.That expectation puts immense pressure on builders and founders, who find themselves in a cycle of continual announcements to satisfy the community's desire for constant stimulation and progress.In the last cycle, big gaming projects offered one example of this phenomenon. Some individuals believed that ambitious Triple-A games — built on Unreal Engine 5 — would be delivered in mere months, even though they typically require three to five years of development.They dumped their tokens when they realized it would take longer, because one year feels like 10 when you're addicted to volatility.In some cases, opening the process of building to the public is a blessing that Web3 has made possible. However, it can also create a toxic climate that negatively affects the mindset and well-being of project founders.The role of irrationalityStudies have indicated that roughly 75% of venture-backed startups fail.Like startups, NFT collections operate in risky, experimental environments. Yet, the market often overlooks the risk, instead expecting indefinite success and growth.This is highly driven by confirmation bias, a psychological phenomenon that involves putting an emphasis on information that aligns with a person’s existing beliefs and preferences while ignoring contradictory evidence.During the previous bull run, this was epitomized by "WAGMI,” an acronym for “We’re all going to make it.”But in a market driven by buying and selling, some participants must lose in order for others to win.That unfortunately means there is no WAGMI — especially in an environment with low financial literacy and a lot of anxiety. This combination can be particularly dangerous as it leads to decisions driven more by emotion than rational analysis.Related: History tells us we’re in for a strong bull market with a hard landingOn the bright side, the ecosystem has evolved a lot since 2021. The good projects that managed to adapt to market changes and the market context are becoming more evident, and there has also been significant human maturation.Many founders became “CEOs” overnight, which is analogous to changing a car's tires while it's moving at 100 miles per hour — 24 hours per day, seven days per week. After almost three years and some pivots, many of these CEOs and teams are much more mature, prepared, and focused on delivering something of value.And while success depends largely on them, it also depends on the maturity of the Web3 community. Good leaders will not be enough to fix the game if it’s broken by excessive greed, anxiety and irrationality. Investors should consider this — and try to improve, financially and personally — as we enter the next bull run.Lugui Tillier is the chief commercial officer of Lumx Studios, a Web3 studio in Rio de Janeiro that counts BTG Pactual Bank, the largest investment bank in Latin America, among its investors.This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

The ‘WAGMI’ mentality is undermining crypto


                    
                    Cryptocurrency is going to break out of its bubble and reach critical mass thanks to layer-2 blockchains — and a couple of other factors.
                    After 2021, we entered an era in cryptocurrency where people stopped talking only about financial decentralization and started to broadly discuss the tokenization of everything, thanks in part to nonfungible tokens (NFTs).This shift represents a critical perspective that is set to guide three theses for the upcoming bull market. To fully grasp these theses, it is crucial to understand that everything is data. Money is data. Your engagement with a brand is data. Your credentials are data. The ticket for your favorite show is data.Since 2021, the ecosystem has increasingly started to store a large part of this data in the form of fungible tokens, NFTs, and timestamps on the blockchain, which acts as a data repository in this context.Related: Expect new IRS crypto surveillance to come with a surge in confiscationWhile not all data needs to be on the blockchain, the ability to place data on the blockchain radically transforms how we store, share, and utilize data for automated and secure instructions and transactions.Re: non-financial blockchain use cases. pic.twitter.com/lYZFprXAry— vitalik.eth (@VitalikButerin) May 27, 2022

And it seems that this prospect of tokenizing everything is coming to Bitcoin. This gives rise to the first thesis.Ordinals and similar protocols continue to grow, while Bitcoin becomes a network for multi-assets (or multiple data types)In January 2023, Casey Rodamor publicly released the Ordinals protocol, which, in short, allows for the permanent insertion of any file type into the Bitcoin blockchain.In less than a year, the community has already conducted experiments in which music, artwork, journalistic articles, and even video games are being inscribed on the world's leading blockchain.The Ordinals protocol was not the first to allow this, but it has gained the most traction. And everything indicates that this is a flame that will not go out.More than just a technical protocol, a culture and a mindset have been created where more and more builders see Bitcoin as a canvas for the creation of other projects and applications, and nothing can stop well-established cultural movements.But remember: not everything needs to be stored 100% on-chain, as this is expensive and, for some applications, inefficient.Therefore, protocols such as Taproot Assets — which enable the creation of other assets — on the Bitcoin network but in a way that keeps most of the information off-chain, will be essential.Speaking of storage costs on layer-1 blockchains, it looks like layer-2 blockchains are set to shine.Crypto will break out of its bubble and finally reach the everyday person through layer-2 blockchainsThose who were active during the 2021 bull market recall that $50 for a transaction fee on Ethereum was almost the norm, not to mention the spikes, like during the minting of the Otherside NFTs by Yuga Labs, where users paid up to six Ether (ETH) per transaction.It's simple: if the blockchain isn't invisible, it won't reach the mainstream. And expensive and slow transactions make the blockchain highly noticeable.That's why layer-2 blockchains — designed to scale layer-1 blockchains — will be so crucial for the next bull market.Although they've been around for years, neither they nor the market was mature enough to build on them in the last cycle. On one hand, many companies and developers weren't convinced that layer-2s were stable enough to handle a significant influx from the mainstream. On the other hand, there was also the issue that, in the excitement of the moment, people acted without studying and understanding much.The number of projects unnecessarily on Ethereum was significant, and the reasons varied: it was cultural, because some companies didn't even know what secondary layers were, or simply because everyone was building on Ethereum.Now, with all the lessons learned and the calm that has settled in with the bear market, it's clear that the mentality for building is much more mature, and the 'jobs to be done' by blockchains have become much clearer to those who are building.And the cherry on top will be the implementation of EIP-4844, which is expected to happen in a few months on the Ethereum network, and will further reduce the transaction costs of layer-2 networks, making them even more invisible and robust to attract and retain the mainstream audience.Comparison of gas fees before and after EIP-4844. Source: IntoTheBlockBut it's useless for the infrastructure to be invisible if people can't connect to it and companies can't build on it. However, the solution is already here!Abstraction solutions will be the main gateway and retention mechanism for users and large traditional companies on Web3The big issue is that with the tokenization of everything, in some cases decentralization is more of a hindrance than a help.If the topic is Bitcoin (BTC) custody, the topic of decentralization is pertinent. However, when the subject shifts to tokenized tickets or a company's loyalty credentials, the value does not lie in the system's decentralization. Therefore, simplifying the user's experience by abstracting complex processes — such as creating a semi-custodial wallet with social login or eliminating concerns about gas fees — makes total sense and it's necessary.Related: Bitcoin beyond 35K for Christmas? Thank Jerome Powell if it happensAbstraction solutions were the missing bridge so that the crypto universe does not continue to be a technical environment exclusive to technically skilled people willing to face various challenges and complex journeys. But now, they are ready to shine!And It's not about ending decentralization, it's about having an option. Those who want to remain 100% decentralized can do so, but those who don't now have an option. This way, it avoids the crypto ecosystem dying in the famous chasm of innovation. Because magnificent infrastructures are pointless if people cannot connect to and navigate them easily in everyday life.The Technology Adoption Life Cycle highlighting the chasm between early adopters and the mainstream market. Source: "Crossing The Chasm" by Geoffrey A. MooreSomething that's not often discussed is how important these abstraction solutions are for traditional companies to effectively join Web3 too. How many companies currently have a team of developers who can program in blockchain languages, like Solidity? Making it easier for builders to get started is also crucial.Breaking down the blockchain journey to mainstream into four phases, we could say that the account abstraction solutions, along with the advancements mentioned in thesis two, will propel Web3 into its penultimate phase — with improved infrastructure, fewer technical builders and brands join the game, and the number of applications, projects, and use cases multiply, attracting mainstream attention.As of today, it seems that major blockchains will be increasingly viewed as platforms for multi-asset consensus in the next market cycle and less as currencies. The crowning gem will be the quest for scalability, which will make the layers more invisible and less complex for users to navigate and for businesses to integrate. Welcome to t of Ethereum and phase 2 of Bitcoin.Lugui Tillier is the chief commercial officer of Lumx Studios, a Web3 studio that counts BTG Pactual Bank, the largest investment bank in Latin America, among its investors. Lumx Studios has previous Web3 cases with Coca-Cola, AB InBev, Nestlé and Meta. The author holds investments related to the Ordinals Protocol, though none named in this article.This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.