Reflections on a Bear Market: Is Blockchain Dead?

The Hype and Promise of Blockchain Technology

If you clicked on this to see the answer, I’ll save you some time. Nope. It isn’t. Far from it.

Why?

Let’s rewind to 2013. 2013–2015 was a different time for Crypto. It was SCARY. Mt. Gox collapsed, the space was seen as a haven for bad actors and some of the largest projects and organizations in the space such as the Ethereum Foundation were teetering on the brink of bankruptcy after seeing their Bitcoin holdings crater from the then all time high to $220.

The technology in the blockchain space was nascent, confusing and unproven. Vitalik’s dream of the “Web 3.0” was but a wistful vision of what true believers in the space thought blockchain technology could be and do for the world. Projects that have become staple blockchain names in the Crypto/Ethereum communities such as Augur, Truffle, Etherscan, MyEtherWallet and Metamask were much needed infrastructure that were hardly even in beta.

This was a time where people were imagining a world where people would know Bitcoin (and Ethereum!) to be household names. Despite it all, the early organizations not only survived, but thrived achieving far more than anyone could have ever imagined back then.

Growth and Legitimacy

Technology advanced at a breakneck pace. Bitcoin went global. Ethereum spawned a plethora of true trustless and decentralized “Web 3.0” applications that crypto pioneers had only ever dreamed of just a few years before.

The state of Blockchain technology today is not even a comparison to where it was in the last bear market. If you asked someone in 2013 whether Bitcoin would be around in 5 years you would get mixed responses. If you ask someone the same question today, you would be hard pressed to find anyone proclaiming Bitcoin will cease to exist.

Cryptocurrencies and blockchain technology are now accepted as a part of the modern internet. They aren’t going away and there’s no going back.

Blockchain Use is Growing… and Growing FAST

Despite the bear market, all signs are pointing up and to the right. The number of people in crypto has doubled since last year…

Source: https://www.jbs.cam.ac.uk

And the number of unique Ethereum Addresses is nearing 50 million!

Source: https://etherscan.io/

And today there are over 2000+ decentralized applications running on Ethereum. Blockchain usage in decentralized exchange, finance, gaming and data storage are leading the charge in terms of user numbers, but to me the most interesting use case that has risen over the last few years is stablecoins.

The Rise of the Stablecoin

Bitcoin demonstrated blockchain’s appeal as a tool for decentralized speculation, but in the down market, blockchain has simultaneously managed to demonstrate success as a tool for decentralized stability. The proliferation of stablecoins has unlocked just a taste of the potential that blockchain has for the world.

Source: https://medium.com/bitfinex/bitfinex-and-ethfinex-list-every-major-stablecoin-in-commitment-to-providing-coin-agnostic-9af86d02c6b9

Imagine securing your money in a form that is divisible, secure, censorship resistant AND stable and being able to send that money anywhere in the world at a moment’s notice. The financial system becomes vastly democratized when you can provide people with no financial services a bank without borders. It is a powerful use case completely unique to the blockchain.

MakerDao (The organization/token behind the DAI stablecoin) in particular has experienced some of the most impressive success. The DAI is an asset-backed stable currency that operates without a single intermediary. Many of the stablecoins today are backed by dollars in a bank account, but the DAI has achieved the same stability without the need for any trust.

Every DAI is backed by 150% worth of it’s value in Ether (ETH) which means for every DAI token (which is always worth $1) there exists $1.5 worth of ETH backing it. If ETH’s value goes down below a certain threshold, it is liquidated to keep the DAI’s stable peg. Without going too far into the details, economic incentives keep the DAI’s peg from ever leaving the $1 mark creating the very first digital, trustless, fully collateralized stablecoin.

And the DAI has experienced tremendous success! Over 1% of all ETH in existence has been locked to back the DAI’s value.

Stablecoins have grown into one of the biggest use cases for the blockchain with USDC, PAX, TUSD, DAI, USDT and GUSD commanding a total market cap of over $2.5 billion.

Bear Markets are Opportunities

As I’ve mentioned in a previous article, bear markets are huge opportunities. At Ethos it gives us great comfort to reflect on where the industry was and where it is today and remembering that progress and our role to play in the blockchain industry.

In the Dot.Com crash of 2001, the companies that survived and started building during this time became the dominant forces in our world today. The organizations that were successful became successful by bringing to fruition the promises that caused the bubble to exist in the first place.

Source: https://www.gartner.com/en/research/methodologies/gartner-hype-cycle

Over the next few years, the name of the game will be the 3 Us — users, utility and use cases. The organizations that are able to build real use cases that bring real utility and drive user adoption are the ones that are able to succeed. Blockchain technology needs to bring real value to YOU and billions of others around the world to fulfill its revolutionary promise of a democratized financial future — and it will, in due time.

Ethos and Voyager — A Liquid Digital Financial Future

Our vision is to be the most trusted way for individuals and institutions to custody and trade fiat and digital assets. Our mission is to build a financial ecosystem that is open, safe, and fair for everyone.

Liquidity is the ‘HTTP’ of the Internet of Value. It is the foundational economic protocol for the future of money and it is largely unsolved. Markets are fragmented, custodied funds are often illiquid or inaccessible and consumers are never guaranteed the best execution which can often vary by several percentage points, costing consumers exorbitant amounts.

We see a missing link in the crypto ecosystem — a missing piece of infrastructure and user experience that is holding back blockchain technology adoption. We see this market as an opportunity to flush out the bad actors and vaporware and make space for substantial organizations that drive real adoption.

The endgame is delivering on the promise of blockchain technology and to improve the lives of people all around the world. It was this promise that drove the bull market of 2017 and it is this unwavering vision that will make us successful.

We see the opportunity and are ready to seize it.

Shingo Lavine
Founder and CEO
Ethos.io