Crypto is crashing and it is good
By: Verified On Chain
Tags: Cryptocurrency, Cryptocurrency Prices, Crypto Price Falling, Blokchain, Bitcoin Prices Falling

Blockchain has been all about cryptocurrencies so far. Blockchain and Bitcoin meant the same thing to most people, not so long ago. And then, the price of Bitcoin soared. And soared. Other cryptocurrencies followed its lead. At the blink of an eye, there were hundreds of cryptocurrencies floating on exchanges. All valued at millions and billions of dollars. This led to the birth of traders and crypto hedge funds. The price kept soaring. All made merry.

So dreamy!

It didn’t last long though. The price came crashing to the one-third of its peak. People lost money. Tons of it. The price hasn’t bounced back since and it is already 9 months since the crash. There were talks of Bitcoin breaching $50,000 by mid 2018. It is hovering at $6,000 and 2018 is about to end. $50,000 looks a little distant.

(Bitcoin price chart)

I am an entrepreneur. I do not understand the valuation of crypto projects. I feel a little out of place. It doesn’t make much sense to me. It is all so speculative.

Another Tulip?

(Semper Augustus, the most expensive tulip sold during tulip mania)

Definitely not. Whoever compares cryptocurrencies to the tulip craze of 1637, doesn’t truly understand Blockchain. Tulip mania kicked in owing to its different look and feel as compared to other flowers. People had not seen anything like that before. Traders started harvesting all kinds of tulips and gave fancy names to fetch high prices. It became a symbol of luxury. It was superficial. It was purely speculative. Ultimately, after around six months, the bubble burst.

(Tulip Price Index)

The two graphs have striking similarities. No wonder people get tempted into believing Bitcoin is headed the Tulip route.

But, that’s alright. The dust is settling.

The bigger picture is unfolding. The interest of common people has ebbed and flowed in line with the price of cryptocurrencies. Again, that’s alright. It is such a relief.

Why is it a good thing?

Scams will reduce. Deservedly, Blockchain will start getting a bit more limelight for the right reasons. The clones of Ethereum will taper down. More Blockchain POCs will start seeing the light of production. More Blockchain favourable policies will emerge from governments across the world.

Let’s talk about it one by one.

Scams and Hacks

The list of cryptocurrency scams and hacks is quite long. Scammers have made millions of dollars. Hackers have stolen millions of dollars. Be it the hack on the mighty Ethereum or be it the controversial hack (scam?) on Japan’s crypto exchange Mt. Gox. Most major crypto exchange s have been hacked at least once- Mt. Gox, Kraken, Poloniex.

Just when hacks on exchanges were subsiding, the world of Blockchain got introduced to ICO scams. Fake companies were formed with fancy white-papers. They raised millions via ICOs and vanished. Even though the concept of ICO is empowering, it got a bad name.

The question to ask is why did so many exchanges and Blockchain networks get hacked. What led to so many ICO scams? The answer is pretty obvious. It is due to the madness in the crypto world- unrealistic valuation of networks. The price of cryptocurrencies just kept on rising. Common people got sucked into it. They put money in the networks, they had no clue about. They saw it as an opportunity to make quick money. Networks and exchanges became the honey pot for hackers. They made merry.

Common people started being wary of cryptocurrencies “aka Blockchain”.

Unfavourable Regulations

Such scams and hacks forced multiple governments across the world to make stringent policies around cryptocurrencies. They had to step in to protect their people. In a few countries, the government even banned the conversion from fiat currency to cryptocurrencies. In some other countries, the government made cryptocurrencies ether illegal or out-of-reach of the common population. To be fair to them, they did the best they could to protect the people from losing money. Even though the intention was right, such regulations put brakes on application development on Blockchain.

Blockchain, by its inherent structure needs cryptocurrency to work. Blockchain developers and companies faced a major setback courtesy these regulations. I strongly believe that the governments will revise their crypto policies and be less strict about it. They have openly backed Blockchain and the right sound bytes are slowly beginning to emerge across the world.

The Present State

As a result of the falling price of cryptocurrencies and strict regulations, scams have come down and the hacks have gone down too. The number of ICOs have gone down. There was a period in 2017, when a new Blockchain network was born almost every week. What madness! It is reassuring that the number of such networks has gone down.

Common people are a bit more aware of the Blockchain technology now. They are still far from understanding all of its nuances but the journey has started. I meet people these days and the discussion is a lot richer now. People are a lot more informed now. Blockchain is no more a black box to them. You can clearly notice the effort people are putting in to unravel it. These are good signs for Blockchain technology.

This slow-but-sure shift will empower people to take informed decisions in the area of Blockchain and cryptocurrency.

Conclusion

Vitalik Buterin, creator of Ethereum, mentioned that it is highly unlikely that the crypto world will see another 1000X growth. He is spot on. There is hardly any person in the world hasn’t heard of the word “Bitcoin” at least once now. The mystery is over.

As the understanding of Blockchain among common people matures, there will be more quality work in this space. The focus is in the right place now and it must continue. Most distractions have died down.

Blockchain is in its infancy and it needs help from us. Inputs from developers, industrialists, lawyers, policy makers will play a key role in making it more robust and resilient.