Sunday Tribune - - PROPERTY360 - TYLER COWEN Bloomberg

TH­ESE days, cryp­tocur­ren­cies are far from the rage. Many have lost 80per­cent or more of their mar­ket value from their peak in Jan­uary, and some have fallen off the map al­to­gether. But per­haps that de­vel­op­ment is what we need for crypto to take the next step for­ward.

For con­text, rail­road stocks col­lapsed af­ter a bub­ble in the

19th cen­tury, but still the rail­road con­tin­ued to trans­form our world.

In­ter­net stocks plunged in the dot-com crash of 2000-2002, but that cleaned out the bad com­pa­nies and paved the way for the sub­se­quent tech revo­lu­tion, in­clud­ing the rise of Ama­zon and Google.

This his­tory is no guar­an­tee crypto will take off. But it does show that a price col­lapse does not have to her­ald the end of a tech­nol­ogy.

One prob­lem crypto has had is that too many junky ideas were tossed around and then of­ten funded by ICOS (ini­tial coin of­fer­ings).

That is hardly a sur­prise, given that the as­set class went from ba­si­cally zero to more than $800bil­lion (R11.33tril­lion) value at its peak.

Peo­ple will try to get their share of that pie, and that will lead to thou­sands of white pa­pers, star­tups, frauds and, yes, some valu­able in­no­va­tions.

But from an out­sider’s point of view, it is hard to tell good from bad. For many peo­ple crypto still has a du­bi­ous rep­u­ta­tion, due to lin­ger­ing and not en­tirely ac­ci­den­tal con­nec­tions with get-rich-quick schemes, money laun­der­ing and the drug trade.

New mar­kets, in­clud­ing valu­able ones, are of­ten abused at first.

Now the time has come for crypto to go on a diet. No more easy money. No more thoughts about ICOS lead­ing to quick riches.

The rhetoric is shift­ing to­wards a more cau­tious or even apolo­getic tone. The cor­re­spond­ing re­al­ity can per­haps be one of greater fo­cus and rel­e­vance.

We’re at the point where crypto fi­nally has to prove its so­cial worth. But what might that mean?

Imag­ine us­ing crypto as a medium of mi­cro­pay­ments to pay for me­dia on the in­ter­net. Or per­haps you’ll use the blockchain to ver­ify your iden­tity.

Or how about a sys­tem for self­ex­e­cut­ing, zero-cost con­tracts? (For ex­am­ple: I will give $10000 to a char­ity if 10 other peo­ple do.)

Maybe the bur­geon­ing field of vir­tual re­al­ity will rely on crypto to sup­port some of its trans­ac­tions, start­ing with vir­tual sex, which the ma­jor banks might stay away from.

Al­ter­na­tively, I might use crypto as­sets to send money to Mex­ico, avoid­ing the steep charges from cur­rent money trans­fer sys­tems.

In the more utopian vi­sions, crypto leads to the rise of en­tirely self-gov­ern­ing sys­tems, pow­ered by the blockchain.

For all the ex­per­i­ment­ing and the­o­ris­ing, how­ever, bit­coin and other crypto as­sets have yet to re­ally change the world in those ways.

Now is the time to make a big push on th­ese and other fronts, be­cause the money won’t be in crypto un­less it is help­ing to solve some con­crete prob­lems. |

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