1. Killer apps in crypto are financial in nature like stores of value, capital formation, and stablecoins, but crypto currencies are not strong as currencies due to price volatility and security issues. 2. After 10 years, no decentralized applications (dApps) are relevant to the real world, and scalability remains lackluster. 3. While decentralization is a goal, in practice Bitcoin is highly centralized, controlled by a small number of miners, developers, and wealthy entities ("whales"). Inequality in the system is very high.

1. HARD TRUTHS
TO CRYPTO ABUNDANCE
By Two Prime
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2. THE SLOPE OF
ENLIGHTENMENT
Gartner Hype Cycle
Technology Trigger
Trough of Disillusionment
Slope of Enlightenment
Peak of Inflated Expectation
Plateau of Productivity
Time
Visibility

3. 1TRUTH
Killers apps are financial in nature and enabled by blockchain.
Stores of Value - BTC and ETH continue to ossify as stores of value
Capital Formation - ICOs, IEOs, STOs
Stablecoins (USDT, JP Morgan Coin, Libra, etc.)
THE KILLER APPS OF
CRYPTO ALREADY ARRIVED

4. 2TRUTH
A Linguistic Misnomer
Stablecoins however are units of exchange (Libra etc)
Price volatility and security issues make crypto weak
FINTECH already delivers for Billions of users (WePay, AliPay, Empesa, PayPal)
CRYPTO CURRENCIES
ARE NOT CURRENCIES

5. 3TRUTH
No dApps relevant to real world after 10 years
Scalability remains lackluster at best
10 YEARS IN TECH
IS A LIFECYCLE

6. 4TRUTH
100s of central banks (M0)
1000s of investment banks (M2/M0)
10000s of commercial banks (M4)
Centralized
Decentralization
Distributed
THE TRADITIONAL
BANKING SYSTEM IS
DECENTRALIZED

7. 5TRUTH
In theory, Open Source can achieve distributed status
In practice, Bitcoin is highly centralized by measure of miners, wealth
concentration, development, funding. 50% attacks theoretically possible today
GINI coefficient (measure of inequality, aka whales ) “Worse than North Korea”
Cumulative
% Population
0% 100%
100%
Cumulative
%Participation
1. Perfect Equality
Cumulative
% Population
0% 100%
2. Unequal
Cumulative
% Population
0% 100%
3. More Unequal
Cumulative
% Population
0% 100%
4. Total Inequality
G1=0
G2>0
G3>G2
G4=1
BITCOIN IS CENTRALIZED
AND INEQUITABLE

8. The central banks emit M0 FIAT, which are not in circulation (FIAT)
The commercial emit M2 deposits
The economy creates M4 fully backed by real econ. (Accretive)
6TRUTH
THE FIAT ECONOMY
WORKS BECAUSE OF DEBT
OTHER SECURITIES
DEPOSITS
NOTES RESERVES
DEBT EQUITY

9. Argument of “loss from peak” is disingenuous -
few people invested at the peak
Store of value function is real: many people made money
Ab-initio wealth creation
7TRUTH
BTC LOST 60% FROM PEAK.
WHO CARES?!

10. FIAT LOST 90% OVER 100
YEARS. WHO CARES?!
Argument of loss by inflation is disingenuous.
No one saves FIAT for 100 years (it’s invested)
Not true of wage earners (purchasing power increase)
We are, arguably, in deflation for the past 20 years
8TRUTH
UnitPriceofagood
Time
Deflation

11. QUANTITATIVE EASING
IS (MOSTLY) GOOD!
QE1 stabilized values and savers
QE2 dealt with FX (US/China)
QE3 brought about asset inflation
Decouples a financial crisis economic crisis
Avoided repetition of 1929-1934 (gold system flaw)
QE4 possibly coming soon
9TRUTH

12. 10TRUTH
FIX the exchange situation, too many hacks
Can’t FIX keys. Intrinsic distributed key complexity un-
avoidable (not a fit for retail)
51% attacks theoretically possible today
Quantum breaking of SHA256… let’s see it before we panic.
ON SECURITY

13. 11TRUTH
POW Should be outlawed on energy consumption alone.
Nonsense of the nonces
POS is worse in GINI coefficient (The rich get richer)
New protocols for the future needed
ON PROOF OF WORK,
PROOF OF STAKE, ETC.

14. TRUTH
FOCUS ON FINTECH,
NOT ON TECH
LEARN MONETARY THEORY,
BANKING THEORY, FINANCE,
ECONOMY, MMT
GROW THE DREAM OF
CRYPTO WITH REALITY
CRYPTO NEEDS TO GROW UP
12

15. TWO PRIME
TWO_PRIME

16. Roubini: http://signallake.com/innovation/TwelveStepsToFinancialDisaster021108.pdf
REFERENCE