Last week, twin centralized calamities wreaked havoc on the world. The first was an exploit of $230 million of the Indian centralized exchange WazirX. These funds were held custodially in a multisig for their users. The second was an IT outage of global cybersecurity firm Crowdstrike which left millions of devices offline, thousands of flights grounded, hundreds of hospitals disrupted, and even interrupted the London Stock Exchange.
These problems will continue to disrupt and even cost human lives until the world switches to an internet powered by blockchain systems which cannot be turned off or hacked.
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What Happened?
On Thursday, hackers appeared to take control of three of the Safe Multisigs that held user funds on Ethereum. Leading theories indicate that funds were improperly stored with hot wallets, meaning seed phrases were stored on devices connected to the internet. WazirX accused a discrepancy of Liminal Custody’s interface as the ultimate cause of the hack.
Either way, it is clear that the ultimate problem was that users lacked custody and control of their own funds.
Crowdstrike’s causes are also still being determined. Expert consensus is that an update was pushed that did not undergo the proper testing and approval. Again, the actual problem here is not that those trusted with power failed us, it is that we trusted them with power in the first place.
While the costs of the IT outage are not directly measurable like those of the WazirX hack, it is sure that Crowdstrike’s damages will be measured in billions.
Crypto Solves This?
Yes. Contrary to popular belief, FTX was not a failure of crypto. It was a failure of greed and centralization.
FTX was a completely centralized exchange, as is WazirX. It is no surprise that when we continue to trust people with our money, this will find a way to lose it. This is why we must own and control our own money. This principle is known as self-custody and it is one of the bedrocks of blockchain.
Self-custody is so important because it means that authoritarian governments, incompetent banks, and cybercriminals cannot steal our hard-earned money. It also means that we can more easily profit off of our money as we decide how to earn yield and tap into passive income.
It’s really that simple. That’s what crypto is about, as well as decentralization, which dictates users should control their own funds and data, and that no one entity should have the power to turn it off and prevent our access to it. This is demonstrated by Crowdstrike’s centralization.
Thus, blockchain’s purpose can be summed up as:
- User’s control over money
- User’s ability to profit from money
- User’s guarantee of access to money
This is why decentralized exchanges are a profitable use case of blockchain. They allow users to make profit while holding their funds. Arguably the most famous non-exchange crypto app is Polymarket. Why?
Because users want a censorship-resistant and easy-to-access betting markets safe from regulatory freezes and arbitrary infringement violations, they turned to blockchain as a verifiable computer to achieve this.
It is not that complicated. Ignore gimmicky layer 2s and other flash-in-the-pan, hyped launches. As of now, the clearest path forward to adoption is through DApps that allow users constant control, access, and ability to profit of their money.
Virtual Labs is only a few weeks away from an exciting release, two and a half years in the making. Defined by excellence in UX, sub-millisecond finality, and adherence to crypto’s core use case, our hope and expectation is that this DApp will be the first to reach 10 million daily active users. The killer feature is the first self-custodial and sustainable yield generation source for crypto’s largest asset class: Bitcoin.
Bitcoin tokens are collectively worth over one trillion dollars, yet the asset class is unproductive with average yields below 0.5%. Earning 20% APY of just 20% of this Bitcoin would generate at least $40 billion in annual profits. Capturing just 1% of this volume would make this DApp a unicorn.
Some users already have access to the beta version. Look out for secret codes in our X and website.
Conclusion
The secret blockchain use case that we have been searching for all along is self-custodial and decentralized money. In other words, DeFi—decentralized finance.
The other half of the blockchain narrative is self-custodial and decentralized data. While promising, self-controlled data and the associated benefits of privacy, truth, and more interoperable systems seem less likely beachheads for blockchain adoption.
In conclusion, don’t trade on CEXes or use banks, trade onchain and hold crypto.
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