Nowadays, cryptocurrencies are far from their best indicators, because the rate of Bitcoin is at around $5,600. Many users have already lost about 80% of the market value of assets, some digital coins have disappeared. But perhaps this development of the industry is exactly what we need for a big step forward.
“Nutrition Restrictions” for Cryptocurrencies: No ICOs and Deceived Investors. Development of Technology for the Win!
So says Crypto Bloomberg columnist, professor of economics at George Mason University in the United States, Tyler Cowan. He expressed the opinion that the cryptocurrency sphere has become more mature, and, despite the low indicators of the cost of Bitcoin compared with December 2017, it can develop into a more “mature” industry.
Many researchers compare the crypto industry with a bubble and the once-existing dotcoms. Now, digital assets and attitudes towards them are similar to many stocks and securities, which have had a significant impact on the course of economic history. For example, Internet stocks fell as a result of the dot-com crash of 2000–2002, thus eliminating one-day fraudulent companies and preparing the ground for a subsequent technical revolution, to which the growth of Amazon and Google could be attributed. After all, every new market, including the stock market, is often subject to violence.
These examples do not guarantee that the cryptocurrency sector will develop and will be accepted by the world economic community in this way. Although the prerequisites for the repetition of the historical cycle are there. The main thing, as Cowan says, is that the industry should not pay attention to external aggressors, it is necessary to develop the technology and adapt it to life.
“One of the main problems of the cryptos was that there were too many dubious ideas around the industry in the form of constantly-emerging ICOs. People wanted to get their share of this ‘pie,’ and this led to the emergence of thousands of startups and scammers,” Cowen writes and adds that, in addition to the negativity and deceived investors, this story with lost investments has taught users to be smarter.
Now, according to the economist, it is time for a diet. These days, one does not need to rely on ICOs, which lead to rapid wealth. The rhetoric is moving towards a more cautious or even “apologetic” tone for the stolen money and unrealized promises.
“We are at the point where cryptocurrencies finally have to prove their social value. Imagine using crypto as a medium of micropayments to pay for media on the Internet. In the more utopian visions, crypto leads to the rise of entirely self-governing systems, powered by the blockchain,” as Cowan suggests.
Cryptocurrencies are more than “new gold.” Therefore, digital coins do not need to try to survive only as investments or securities, after all, precious metals and financial markets have been around for many decades. The digital industry needs a good story that would eventually go beyond the heroic innovation of Satoshi Nakamoto and become a new stage in the development of the payment economy.
“The crypto world should work diligently to eliminate existing shortcomings. You have probably heard that Bitcoin mining is harmful to the environment because it uses a lot of energy, or that the data on the blockchain is too bulky to transfer. More innovations are needed,” as the economist cites the existing cons of the system.
As a conclusion in his article, the columnist expresses hope that the time has come to “do or die,” that is, to reform and become a new economic system accessible to all, or disappear from the world of finance. “I am modestly optimistic, but it is time to put up or shut up.”
Give It Time
The position expressed by economics professor Tyler Cowen on the future development of the crypto industry is not innovative. Many digital asset researchers and blockchain experts have repeatedly expressed their opinions regarding the future course of the ten-year history of cryptocurrencies.
In an interview with the well-known crypto enthusiast, founder and partner at Morgan Creek Digital Assets, Anthony Pompliano, the equally famous cryptocurrency analyst Murad Mahmudov said that now users need to remain calm and relaxed because the development of cryptocurrencies is taking the right path.
“A lot of people consider that a lot of people complain that Bitcoin is not evolving or Bitcoin is too slow. To me, those people are exhibiting high-time preference and impatience. I think the alt-coin boom and the ICO boom, a lot of the blockchain boom as well, has its origins in part because of this. True Bitcoiners understand that this isn’t a six-year get rich quick scheme, but it can be an 80-year project. It’s something that perhaps will continue going on until the end of our lives. So every change to the system needs to be extremely careful,” as Mahmudov suggests.
In an interview and on his Twitter page, the analyst made several assumptions about the future value of Bitcoin. The “worst-case scenario” states that the price of the first cryptocurrency will reach $160,000 by 2023. After five years, the fourth cycle of development of the coin will begin, when the indicators will repeat the movement of the wave and at the same time maintain an upward trend. “Hope for the best, but it is best to prepare for the worst,” says Mahmudov and quotes a Chinese proverb, “the more you sweat in peacetime, the less you will bleed in wartime.”
Also, based on previous indicators, Murad Mahmudov suggests that the bearish trend of 2018 is identical to the fall cycle in 2014, after which Bitcoin growth was observed. “The market bear is playing the same way as last time. Some people believe that it may take even longer,” writes the analyst.
Mahmudov’s interlocutor on the interview was Anthony Pompliano, founder and partner of Morgan Creek Digital Assets, who also presented his point of view on the development of the crypto industry. According to Pomp (Pompliano’s nickname on Twitter), in 2023, Bitcoin will cost $50,000, but for now, the asset will fall to $3,000 with a red corridor of 650 days.
“Parabolic price growth is becoming slower, as each surge is measured from the last historical maximum to the new. The first rapid price increase took just over 300 days (2010–2011), and the second—more than 900 days (2011–2013). The last parabolic price increase reached around $20,000 (2013–2017), and it took almost 1,500 days,” as Pompliano writes on a blog.
Opposing Opinions: No One Needs a Cryptocurrency
At each cryptocurrency forum, the future of the industry and its components are being discussed, in particular, the question of whether digital coins and blockchains will be used in the processes of the global economy. One of the sensational disputes over crypto assets and distributed ledger technology took place at the end of August 2018. Then, at the BlockShow Americas conference, there was a discussion about the usefulness of cryptocurrencies between Nouriel Roubini, the CEO of Roubini Macro Associates and the predictor of the global financial crisis in 2008, and the founder of the Celsius network Alex Mashinsky.
Roubini argued that there is no security, democracy, and decentralization in the blockchain space, a mantra which is continually being repeated by crypto enthusiasts and technology advocates. Mashinsky answered that the current economic system does not work for seven billion people in the world, because until now “only people who work on Wall Street could pay their bills” and not deny themselves anything.
During the discussion, they touched upon the topic of the deployment of the blockchain for commercial purposes. Some of the speakers also expressed doubts about the use of cryptocurrencies in everyday life. Austin Kimm, the chief operating officer of Crypterium, said that as long as there is no real use of cryptocurrencies in life, there is no reason why older people will use cryptos in everyday life.
The founder of the U.K. Digital Currency Association, Eric Benz, compared the size of the ecosystem of digital assets with an amoeba, the growth or shrinkage of which is influenced by external factors that do not guarantee the safety of an asset. “At the end of the day, from a consumer point of view, I want to know that my money is with me at night.”
Speaking about the tokenization of physical assets, TechCrunch Editor-at-large Mike Butcher said that a reliable legal infrastructure was needed for the industry to flourish. Legal regulation will be the solution to all problems. Blockchain Cuties CEO Vladimir Tomko argued that by 2019, for example, the gaming industry will be tokenized.
At the same time, Tomko acknowledged that many ICO projects turned out to be scams, so now the community and developers need to work on the image and make the environment more transparent and safe.
In the discussion on how blockchain can affect the developing economies of America, group moderator Michael Gasiorek said that the projects have a lot of good intentions, but the main problem still lies in attracting and adapting cryptocurrencies for regular users.