THE CRASH COULD BE GOOD FOR CRYPTO
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. |