Crypto evangelists keep the faith when prices fall

In June, San Francisco hosted the largest Web3 event the city had ever seen. “Join the world’s brightest dreamers and doers for a full day focused on Web3, Dapps, Protocols and the Future of the Internet,” the website says. “Change is in the air.”

For more than six months, the idea of ​​a third iteration of the Internet has held a firm grip on the U.S. tech sector. Although still theoretical, web3 has been hailed as proof that cryptocurrencies can be used in the real world. Even in the cold of a crypto winter, believers hold strong.

Web3 evangelists still believe that the future of the Internet will be determined by users. Instead of companies deciding how we interact, online life will be decentralized, meaning users can freely connect with one another. Blockchain technology and cryptocurrencies will allow us to safely spend and send our money online without going through banks and other financial institutions.

The web3 conference called Graph Day in San Francisco was an opportunity to see how this dream was progressing. It took place at the Palace of Fine Arts, a huge, Roman-style rotunda in the posh Marina district, and gathered impressive supporters. There was over $400,000 to be won at a hackathon. The sponsors included digital asset platform Coinbase.

The problem is that Graph Day was invented before the cryptocurrency's worst crash. Towards the end of last year, the price of Bitcoin, the world's largest cryptocurrency, reached a new high of almost $50,000. Hollywood actor Matt Damon was one of the celebrities who promoted tokens and crypto exchanges. Its television commercial, shown during the Super Bowl, encouraged investors to consider crypto because “fortune favors the brave.” Gwyneth Paltrow has teamed up with Cash App to give away $500,000 worth of Bitcoin, telling Elle magazine she wants to help bring more women into the world of crypto investing.

By June, however, the combination of rising interest rates, recession fears and constant scams had caused the crypto bubble to burst. The price of Bitcoin had almost halved and was still falling. Dogecoin, a cryptocurrency created as a joke and popularized by Tesla boss Elon Musk, had fallen to $0.07 from a high of $0.52 in early 2021.

But don't think a spectacular crash could shake the tech industry's confidence. Despite the fact that prices collapsed, the mood on Graph Day was still bullish. At the party that followed, the drinks flowed and there was talk about non-fungible tokens. Instead of exchanging business cards, one partygoer offered up his phone with a QR code linked to his Twitter account, complete with an NFT profile picture.

Cautious voices were few and far between. "Perhaps," mused one partygoer, "this will be the last event of its kind ever. But I seriously doubt it."

It's easier to dismiss a price drop if you insist that the goal isn't personal wealth. Web3 and crypto conferences like to promote the idea that crypto is a force for good. Some participants were recently at Crypto Bahamas and Crypto Miami - gathering in tropical locations with the likes of Tony Blair and Bill Clinton to congratulate themselves on improving the future.

Any mention of the volatile price of digital tokens is considered a faux pas. Crypto may have created riches for some and left many others with heavy losses. But the web3 conference in San Francisco focused on how blockchain technology could make the world a better place. Getting upset about fluctuating prices is for the idiots on Wall Street who are only interested in making a quick buck and have no idea about the technology behind it.

Comparing profits or assuming that crypto could be pure speculation is taboo. This also applies to any mention of criminal activity involving crypto or the hacks that have put some investors in the red. Right now, this “never say die” attitude is exemplified by Sam Bankman-Fried, the 30-year-old billionaire who founded the crypto exchange FTX. Known for riding in defense of crypto and wearing shorts and T-shirts with his hair curled sideways to dressy events, he has stepped in to provide loans or buy up struggling crypto companies like BlockFi. It is reported that he is now eyeing trading app Robinhood.

There will be more opportunities for believers to benefit in the coming weeks. The crypto crash has continued since Graph Day. Ethereum, the second largest cryptocurrency, is down 73 percent from its peak. The share price of Coinbase, which went public just last year, has fallen 77 percent this year. When I asked an event attendee how he felt about the dramatic drop in crypto prices and whether it could put a damper on future conferences like this one, he said he was just looking forward to buying more.

elaine.moore@ft.com