Is this just the beginning?
Bubble and Bust for Bitcoin or just the start of things to come??
What a silly question you might ask. Having topped US $20,000 in late December, market leader Bitcoin has experienced an extended pullback to currently sit at US $8,141 at the time of writing. Prominent traditional media outlets have screamed that the bubble has finally popped. That like the Tulip mania of the mid 17th century, a lack of inherent value has finally resulted in this dramatic downturn. A lack of regulation, supportive legislation and institutional funding are all cited as core reasons behind this downturn, but is this the reality?
Bitcoin didn’t have institutional funding when it retraced from US $1,000 to US $300 in 2013, nor was there an ecosystem in which an abundance of projects were working on solving core issues such as scaling. There was no regulatory framework, effective legislation tabled or attempted integration with traditional financial markets and funding sources in 2013. In contrast, the current landscape has both empowering legislation (as seen in Malta), regulatory frameworks from global institutions such as the G20 and the formation of Bitcoin futures contracts that has already seen millions of dollars in volume.
On a purely technological level, the claim that Bitcoin or blockchain technology has no inherent value or is somehow similar to the previously mentioned Tulip mania of the 17th century is ridiculous upon any kind of serious review. Not only does the immutable ledger that blockchain technology provides have multiple existing use-cases, from logistics in agriculture, to voting in places where technological restraints exist or corruption is rife, but it also allows for a fundamental restructuring of the existing banking model. In a world of global air travel, instant connectivity and smart technology, antiquated systems of value transfer such as international bank wires, with their high fees, must also be assessed. Blockchain technology provides a ready-made platform from which this can be achieved. With its value justified beyond the level of the tulip mania of the 17th century or similar phenomenon like the South Sea Company bubble of the 18th century, we as a blockchain community must naturally look forward to the future of cryptocurrencies.
The drawdown in the value of cryptocurrencies since the height of their value in December 2017 has had an interesting effect on the crypto ecosystem as a whole, similar in a sense to the effect a bushfire has on the affected habitat. In the event of a bushfire, excess vegetation is removed and seed germination is triggered resulting in a healthier ecosystem resting upon the nutrient-rich ash bed of bushfires past. Simply put it cleanses the affected area, breathing new life into it in the process. In the context of cryptocurrencies, this downturn has had the same cleansing effect as investors are fewer in number and more selective about the type of projects that they want to invest in. In true Darwinist fashion, only the most viable projects have survived. No longer is ICO funding indiscriminate or plentiful in nature. This more selective funding (and the higher levels of research that go along with it) reduces the chances of fraudulent projects or projects pursuing unviable use-cases receiving funding, creating a healthier eco-system in the process. As retail capital and institutional funds flow back into these viable projects and regulatory actions pave the way for much needed infrastructure like a Bitcoin ETF, the entire blockchain community will benefit and the race to mass-adoption will be run and won all the sooner.
Belief is a notion that drives us all. It’s a core component of what it is to be human. Our belief is only further empowered when directed, in unison, towards a noble goal. The eradication of disease, the abolition of poverty, banking the millions of unbanked worldwide all stand as inherently worthy goals to strive for. Blockchain technology has the power to effect change on all of these issues and more. More innovation, more development and more testing is all that is needed for us to disrupt traditional industry for the better or to achieve humanitarian aims. The goals that the cryptocurrency community set for itself are exceptionally lofty, and with due reason. This is only the beginning.
