In 2017, the world was a different place. Donald Trump was the new President—ushering in years of contention about social engineering and Russian “bots” on the internet. Tensions flared then cooled with North Korea. A Turkish restaurateur took the meme world by storm by [hold your breath] salting a steak from three feet above the sizzling meat. Fidget spinners were all the rage, and for some reason, the romper became a fashion statement for one blazing summer.
In the investment world, nobody made more money than the bitcoiners, except maybe the early BitConnect guys, or maybe even a few lucky ICO buyers, but there were other things brewing that only the insiders knew about at the time.
Normies were starting to learn about Bitcoin as the news cycle heated up. CME group and CBOE were launching futures trading services, and there were rumors of an incoming Bitcoin ETF. With Bitcoin Cash on the horizon, people were frenzying to get “free coins” by holding bitcoin through the split, and the network was beginning to show the growing pains of the one megabyte block size limit. Enter Ethereum: a global, public Turing machine that allowed developers to create monetized applications, tokens and other operations that had been deprecated from BTC.
Because of the ease of development, software engineers flocked to Ethereum and created a boom in ICO issuance as well as favoring the “ether” currency to transact when BTC was too slow and expensive to send between exchanges. Well, before long, Ethereum started to show that while it was a dream to develop on, the network was not engineered to handle the traffic that users were creating, which begged the question, “could any of this scale?” With BTC average fees around $50, and Ethereum barely holding things together, December of 2017 was nearing calamity. And then CryptoKitties arrived.
What’s a CryptoKitty?
The nerds will tell you it’s an ERC-721 NFT contract built on the Ethereum Virtual Machine, but to the general public, CryptoKitties was the first mainstream game on a public blockchain. Each kitty was provably unique and had its own “genetics,” so users were able to trade them and/or allow them to be bred to create more desirable kitties in the next generation. It was an overnight success with rare and desirable kitties selling for over $100,000 each. That’s when Ethereum ground nearly to a halt.
Ethereum is capable of about 15 transactions per second globally, which is roughly double that of BTC, but woefully short of anything capable of computation for a global (or even a regional) economy. With the rapid, massive influx of users for the CryptoKitties game on top of the unprecedented (for the era) traffic of traders, Ethereum fees went through the roof. The game suffered, the other users of Ethereum suffered, and ultimately the experience was at least one factor for ending the 2017 bull run. All of the liquidity was tangled up into networks which could not support any more demand, so people started to sell, and the rest is history.
Ultimately, the markets crashed and Ethereum entered a bear market with the rest of the blockchain economy. There were promises that Ethereum 2.0 would come in and save the day, but not everyone was convinced. It was against this backdrop that David Case, lead developer of an NFT-powered, turn-based game called “CryptoFights” showed up at the Chicago BSV Meetup. He was building the game on Ethereum using the Enjin token framework, and he had been hearing about what the BSV economy was looking to do to mitigate the very real problems of scaling that plagued all blockchains to date. As the host of the BSV Meetup, I was excited to meet David and discuss some of what was possible with the UTXO model and the truly unbounded protocol. He had clearly immersed himself in bitcoin theory before showing up, and we became fast friends…