How to Last the Crypto Winter? Seek Simplicity, Manage Complexity

If little has changed with the fundamentals, then there must be other factors driving the manic buying and panic selling cycles present in these markets? A persistent pattern I have observed in the context of investors and projects in the space is one of information asymmetry.

Making cryptocurrency markets less volatile and projects more substantive is a matter of doing what we can to eliminate the information asymmetry that arises from technological complexity, both with investors and software alike.

Over the past few years, I have seen many projects make massive promises and raise staggering amounts of capital in ICOs and similar processes, only to not deliver, deliver incredibly late or deliver barely-working software.

Similar to the situation for investors, projects have a bimodal distribution of technical ability: a minority that keeps their promises roughly in line with what they can realistically deliver and a majority that grossly overpromises on a regular basis.

Overpromising on software deliverables is often the result of a combination of underestimating the complexity of cryptocurrency software and conscious overstatement on part of project leads.

A project may make some really impressive claims about what it will achieve, but when there are so few people who are capable of realistically assessing how feasible the claims are, it incentivizes malicious actors to bait-and-switch investors.

As the Project Lead for Decred, I am familiar with the process of dealing with complexity from a technical and management standpoint, and our off-chain time-ordered filesystem, Politeia, serves as a good example for how hidden complexity can delay even seasoned development teams in the space.

If any claim made by a project sounds too good to be true, see what someone external to that project has to say about it, and attempt to understand more about how they will deliver on their claim.

Overcoming the complexity barrier between promises and implementation for cryptocurrency projects is challenging.

If 2019 is anything like 2015, the cryptocurrency market is in a consolidation phase, and the next several months will continue to shake out underperforming projects.