The Problems with the Early-Stage Crypto Space

There’s nowhere I’d rather be working in than early-stage crypto. Retail investors are providing huge inflows of cash, and where money goes, innovation grows.

Web 3.0 has the potential to be a technology as revolutionary as the internet. Fully decentralised systems have the power to redistribute wealth, prevent crime, and even restructure our political landscape, if any technology will provide the next evolution of governance for the global citizen, it will be blockchain.

But web 3.0 is not without its problems, indeed its biggest strength, the fact it is so democratised, is its biggest weakness. There are no barriers of entry for investors in web 3.0. In the dot com boom of the late 1990s. You couldn’t just log on from your computer and invest in Amazon as a seed-stage startup, you had to be plugged in connected, informed. The web 3.0 investor needs none of these things, he has the ability to back the next potential Amazon with the click of a button.

While this is an incredible thing for wealth redistribution, there are some downsides to this level of access. In this article I want to break down the current problems I see with the early-stage crypto space, especially focusing on Binance Smart Chain where low transaction fees have amplified both the strength and weaknesses of decentralised finance. We’ll then look at some ways the Lithium ecosystem is going to try and address these issues.

A Saturation of Shitcoins

A shitcoin, simply put, is a coin that offers no utility except for its ability to act as a store of value. By this definition, you could argue Bitcoin is the original shitcoin, and in some ways, it is. There is no function of Bitcoin apart from its ability to hold value. But you can forgive Bitcoin for its lack of utility due to the groundbreaking technology that underpins it. High leverage work went into creating the bitcoin blockchain, and it led the way for the web 3.0 revolution.

Shitcoins, that behave in similar ways to bitcoin can now be produced in a matter of hours from code templates. These coins rely on one thing, hype, to drive up their value. Sometimes these coins might get big enough that they try and half-heartedly invent a use case for the product, but usually, they stay as what they are.

Examples of shitcoins include Dogecoin, Safemoon, Fairmoon basically anything with Elon, Safe, Moon, Fair or X the title, the list is endless.

The usual argument in favour of shitcoins usually goes something like this ‘shitcoins are good as they help bring investors into the crypto space, they raise awareness and that is positive’. I agree with this point, to an extent, but there’s a number of issues:

  1. Shitcoins often get ‘rugpulled’ a practice where the dev team maliciously takes control of the token liquidity, meaning they get rich and everyone else loses. This disengages people from the space, and causes uncertainty in new technologies.
  2. If a shitcoin is a success, it’s even more depressing. It means millions of capital has gone to a project that offers no value to the world. Capital that could have been deployed far more usefully.
  3. Shitcoins are now so prolific that they are dominating the EarlyBSC space. This has the potential to cause long-term harm to the reputation of web 3.0 as a technology.

As you can tell, I’m not a fan of shitcoins, I feel they’ve served their purpose, they’ve bought investors to the space, but now it’s time they kindly fucked off and made way for real projects. The best way to do this? Educating investors.

Lack of education in the space

The reason shitcoins are so popular is quite simple, investors don’t know any better. They see a juicy looking chart and some slick marketing and think ‘I want some of that’. These investors will lose in the long run. They will lose because they don’t understand what they are doing. They don’t know the basics of an investment strategy, they don’t know how to build wealth. They don’t know how to analyse use cases. They don’t know how to vet tokenomics and they don’t know how the broader picture of how the underlying technology is progressing.

All of this means investors are really no better than gamblers, at Lithium we are looking to change that.

Our launchpad will promote only the highest quality, vetted projects, with strong technology and a great founding team. We will also surface the most relevant information possible to investors, helping them make the best decision possible. We’ll combine this with quality educational content including videos and article like this one.

A Lack of Talent

Crypto is still in a very nascent stage of its life cycle. Right now we don’t have the best talent possible working on crypto startups.

One of the successes of web 2.0 was that every driven, motivated, smart engineer packed their bags, moved to San Francisco, and put their mind on working on something in the mobile-web space.

There are hugely talented developers, designers, marketers, and product people working on the crypto projects right now, but most of them are operating in top marketcap cryptocurrencies. I’ve yet to see the influx of talent that you might expect when such sums of money are being driven to the early-stage crypto space.

Inevitably, this will change, and the spoils of war will go to the projects that can attract and keep this talent. At Lithium we want to financially incentivise talented young founders to build their vision on the blockchain that most suits them, we will then utilise our growing network, launchpad, marketing know-how and product experience to help these founders have as high a chance of success as possible.

Clearly, the early-stage crypto space is not without its issues. But we are confident that by building an ecosystem to identify, support and promote exciting crypto projects, we can bring credibility and encourage real innovation in this generation-defining tech technology.

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Lithium

Lithium

Lithium are a seed and pre-seed crypto venture capital and incubator platform. We exist to power real utility in early-crypto.