Charles Hoskinson calls for sanity & collaboration in the crypto space

Charles Hoskinson has called for the crypto community to work together towards regulatory clarity, cross-chain standards, and accountability. All stakeholders should be intellectually honest and self-critical about the shortcomings of the industry.

The crypto market has tanked into what seems to be a decided bear market. The macro environment e.g the rising inflation in global markets has been a thorn at the crypto industry's side; especially for newbies. The crash of Terra Luna and recently the news of Celcius protocol liquidity problems have only accelerated the industry's woes.

Such incidences are not the first in the space to cause havoc. There have been a lot of rug pulls, DeFi hacks, and outright scams such as the infamous ONE coin debacle. Kept unchecked, greed, poor standards, and half-baked and poorly architectured products will keep the industry from achieving its goals.

Crypto self sabotage

From a recent AMA, Charles believes that the industry will have better chances if it faces these issues head-on. Instead of casually dismissing problems encountered on other chains as a 'them' problem, the space should come together to work on ways to avoid such problems, especially where they're self-inflicted and avoidable.

"Otherwise it will be absorbed by CBDCs, permissioned systems and ultimately a distopian reality where the few have absolute control the data, identity and value of the many" ~ Charles

He called for realistic approaches to managing the risks involved in financial innovation. Such that projects do not set themselves for untenable incentives.

As early as last year, Charles was pushing for the need for the crypto industry to pursue lobbying opportunities that will help mold friendly crypto legislation. This year he says that most lawmakers admit that crypto is here to stay, and is an innovative technology but needs to needs to be regulated.

He's opposed to absolute resistance to any regulation into the space. There's a loud number of individuals who have an anarchist vision of the cryptoverse. Such an absolute idealistic view that any government intervention is bad falls apart while the crypto space continually fails to self-regulate or collaborate to build robust protocols that will protect its consumers.

The bear market, building, collaboration & regulation.

The bear market provides an opportunity for crypto community members from different chains to build and collaborate for the long term. Current market conditions have the effect of weeding out moon-boys, scam artists & crypto shills. This way, even rationale maximalists have the chance to taper their usual indifference towards other projects and come together to effect common-sense ideas that benefit the entire industry.

Perhaps before external regulatory bodies can legislate in a friendly manner, the crypto industry needs to show that it can take certain steps towards self-regulating. Improvements can be done in several areas i.e infrastructure, software architecture, and security.

1. Infrastructure

Crypto wallets need to ensure the security of users' assets. This concern applies mostly to hot wallets which have been susceptible to hacks. This is not to say that users should not learn how to self custody of their assets. However, self-custody is not the only solution for everyone for a number of reasons:

  1. Not everyone is technical enough to know how to do it
  2. Most of the current infrastructure doesn't have a very good user experience (UX).
  3. Long-term planning e.g estate planning, and inheritance while self-custody remains a largely an ill-explored frontier.
  4. Where a crypto holder loses their wallet keys, the consequence that their assets are likely lost forever isn't palatable. More innovation needs to be explored in this area.

While the tenets behind taking control over one's finances via self-custody are noble, individuals shouldn't be siloed into a one-fits-all philosophy. Instead, they should be offered choices on how they want to store their assets. While at the same time:

  1. Designing the lite wallets to be more resilient to attacks.
  2. User education on the pros and cons of choosing convenience

2. Software architecture & security

The argument here is that there should be cross-chain standards on how to ensure that dApps are well thought through, build, and tested for bugs and attack vectors.

Protocols need to be built on both rigorous research and solid engineering principles. At the very least, 'moving fast and breaking things' should be pushed to the edges where consequences do not result in loss of value.

For example, in relation to Cardano, Charles insisted on the need to ensure that projects that launch on the chain are properly architectured to avoid the pains that other chains have suffered when dApps on their chains failed.

Through collaboration, smart contracts' standards can be developed as one of the ways toward self-regulation.

Uniform decentralization metrics

Currently, there are a few decentralization measurement criteria such as the Nakamoto Coefficient. However, there lacks consensus on what common or unique metrics to qualitatively determine to what extent POS and POW chains are decentralized or otherwise.

If the industry remains fractured, it will remain impossible to meaningfully measure.

Are AML & KYC practices automatically bad for crypto?

One of the core ethos of crypto is the pledge to preserve financial privacy. It's no wonder most crypto enthusiasts on some level have an uncharitable view of current AML and KYC policies. There's a good argument to be made about these policies being unnecessarily intrusive.

However, innovations in this area e.g through zero-knowledge proofs can get rid of the overreach by regulatory agencies.

More community participation is needed in crypto lobbying and legislative efforts.

Most crypto enthusiasts might not be technically proficient to review code. However, most of them are smart enough to read through bills and offer valuable insights. If possible should take the initiative to read the Bills and approach their most accessible lawmakers/lobbyists about them.

This way, they will prevent the failures of the crypto space from defining what the entire industry represents.

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