Machine theaters were a genre of literature and plays that emerged in Europe between the 15th and 17th centuries. These productions portrayed spectacular inventions and showcased them for the enjoyment of readers and viewers. Many of the inventions depicted in machine theater were more for entertainment value than for actual use and were never actually built or implemented.
The machine theater phenomenon reflects the fascination with technology and innovation during the Renaissance and Early Modern periods. But it also portrays the strong human desire to speculate and imagine the future together, even if it is not grounded in reality.
In the crypto industry, we see a similar paradox at play. On the one hand, there is a fascination with the potential of blockchain technology and its ability to revolutionize various sectors and industries. On the other hand, there is a tendency for the industry to over-invest in presenting the potential of a technology or idea, rather than its actual substance or usefulness.
One example of this is the emphasis on design and branding in the crypto space. Many projects start out with no users and invest heavily in design, particularly brand identity. In some cases, hundreds of thousands of dollars are spent on design elements, creating the appearance of legitimacy where there is little substance. This emphasis on design often serves more as a form of entertainment than a means of solving real problems.
In this way, the last bull cycle of the industry resembled the machine theater phenomenon, where the focus was on the speculative value and appearance of technology, in order to attract an audience, rather than its substance and usefulness. I think its useful to label such cases, at least mentally, as machine theater.
The market volatility of cryptocurrency prices is often based on machine theater and feeds into this phenomenon, producing boom and bust cycles that are not representative of technological progress.
As an industry, it is important for us to break free from the machine theater paradox and prioritize substance over entertainment value and design. This means focusing on compounding on existing technologies and building upon proven primitives, rather than constantly introducing new and competing technologies.
Our professional capital allocators, in particular, play a key role in this process as stewards of the resources that keep the industry going. By supporting projects grounded in substance that have the potential to build upon existing technologies, investors can help create a stronger foundation for the industry.
Here are some specific takeaways:
The crypto industry resembles the machine theater phenomenon, where the focus is on the entertainment value and appearance of the technology rather than its substance and usefulness.
It is important for the crypto industry to break free from the machine theater paradox and prioritize substance over entertainment value and design.
Projects and their investors should look critically at spending on brand identity, especially where there aren’t users. Other industries have not needed such investment in design to gain adoption.
We should compound on existing technologies and build upon proven primitives, rather than constantly introducing new and competing technologies.
Investors, as stewards of capital, have a key role to play in this process by carefully evaluating the substance and potential of a technology or project.
By focusing on substance over theater and compounding on existing technologies, the crypto industry can create a stronger and more sustainable future.