It’s Time to Raise the Bar in Crypto
Why everyone hates us, and how a Chinese philosophy might help.
"The crypto industry needs comprehensive policies to protect economies and investors." - International Monetary Fund (IMF)
These comments from the IMF have put a spotlight on the crypto industry’s public image. Grouped with economic stability and investor protection concerns, crypto enthusiasts are portrayed as disruptors to the economic status quo.
Coupled with potential regulatory crackdowns (SEC v Coinbase, SEC v Binance, CFTC v. Ooki DAO… the list goes on and on), the industry’s speculative reputation, and the fallout of various crypto scandals (hey SBF, Mashinsky, Do, Kyle) these developments demonstrate a pressing need to redefine the crypto narrative.
Tao Guang Yang Hui
There’s a Chinese doctrine named “Tao Guang Yang Hui,” which translates to “keep a low profile and bide your time,” that may offer a strategic model for the crypto industry to follow. The concept is explained at length in the book “The Long Game: China's Grand Strategy to Displace American Order” by Rush Doshi, which I highly recommend.
The phrase translates to "keep a low profile and bide your time," but it also carries the connotation of "nurture one's strength and avoid taking the lead." This strategy has been a cornerstone of China's rise as a global power.
The doctrine was first articulated by Deng Xiaoping, China's paramount leader in the late 20th century, in the aftermath of the Tiananmen Square incident and during a period of significant economic reform. It was a response to the international scrutiny and isolation China faced at the time. The strategy called for China to avoid attracting attention to its ambitions and capabilities, instead focusing on internal development and quietly building its strength.
In practice, "Tao Guang Yang Hui" meant that China refrained from taking a leadership role in global affairs or openly challenging the existing international order. Instead, it focused on economic growth, technological advancement, and military modernization. By keeping a low profile, China was able to avoid confrontation and direct competition with established powers, particularly the United States.
Crypto’s Wrong Image
Similarly, the crypto industry finds itself under a cloud of public skepticism, often portrayed as a breeding ground for speculation and illicit activities. Yet, beneath this tarnished image lies untapped potential. Cryptocurrencies and blockchain technology harbor the capacity to revolutionize myriad sectors, from finance to healthcare, but this potential is often overlooked amid the din of controversy.
The public's lack of understanding, negative perceptions, and concerns about volatility, security, and regulation are significant roadblocks to broader acceptance.
"I'm not going to agree to a deal that protects wealthy tax cheats and crypto traders while putting food assistance at risk [for Americans],” said US President Joe Biden.
This underscores the crypto industry's need to change its combative tendencies. Our public posturing as the nemesis of banks, governments, and traditional institutions only alienates those whose understanding and support are essential to its mainstream acceptance.
It's high time that crypto pivots from confrontation to collaboration, from rebellion to reconstruction.
Stop Fighting: An Alternative Approach
Instead of audaciously challenging the establishment, the industry should engage in dialogue with regulatory bodies to provide clarity and build trust. Regulation is not the enemy of innovation, but rather a necessary step toward achieving legitimacy and widespread adoption.
We need to do more to proactively reshape our image, engage positively with authorities, and accentuate the technology’s ability to drive economic inclusion and technological innovation. By embracing the 'Tao Guang Yang Hui' approach, the crypto industry could transition from its current controversial standing to a place of influence and respect, transforming its potential into tangible progress.
How Can We Adopt this Strategy?
BUIDL: We should focus on creating a solid, secure, and user-friendly blockchain infrastructure to support the future growth and diverse applications of the technology.
Cooperating with Regulatory Bodies: A recent example of this is Coinbase CEO Brian Armstrong's meeting with House Democrats to discuss crypto. This is a step in the right direction, showing that the industry is willing to engage in dialogue with authorities.
Emphasizing Practical Use Cases: By highlighting the potential benefits and real-world applications, the industry can shift the narrative from speculation to innovation —> Real world assets, AI+Crypto, self-regulation, removal of intermediaries. The list goes as long as you want.
Education: An informed public is a supportive public. By launching initiatives to educate people about the benefits and potential of blockchain and cryptocurrencies, the industry can start to dispel myths and misunderstandings.
Our industry could carve out a smoother path toward acceptance and integration into the global financial system. This approach enables the crypto world to build its strength, prove its value, and emerge as a transformative force when the time is right, which by the way, may not be far away.
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