Crypto is dead, again

Published in

Revix Roundup

7 min readMar 23, 2019

We’ve seen and heard this all before. Will this time be different?

Depending on who you hang out with, you may have heard some good or bad things about investing in cryptocurrencies. It’s true that when the Crypto boom of 2017 hit, many first-time investors dipped their toes in the water buying Bitcoin, Ethereum, Ripple and Litecoin through quick and easy smartphone wallet apps, only to end up losing most of their gains in the crash of 2018. Since then, many people are saying that cryptocurrencies are finally dead for good.

But are they?

What you see, is what you ̶g̶e̶t̶ think

While crypto may have got a bad rap thanks to Silk Road, the online drug bazaar shut down by the FBI in 2013, the hack and subsequent collapse of Mt. Gox and all the subsequent booms, busts, hacks, scams and other headline-worthy activities of the recent past, you’re still not seeing the whole picture, yet.

Why?

It doesn’t sell.

You see, not all the aforementioned allegations are unfamiliar to seasoned investors. Remember the 2000 and 2008 stock market meltdowns? What about AIG, Bernie Madoff, Enron, Steinhoff, the LIBOR collisions, and Valeant? And, let’s not forget WorldCom, Lehman Brothers, FannieMae and the list goes on.

The point is that you read and hear about the disasters, black swans, prosecutions and collapses and not about the mundanities of boring progress. Let’s face it, we humans are a dramatic bunch and it’s why the next stock market crash headline is always only a page away.

This makes it impossible for you to see an objective reality when you’re bombarded with negatives and fixated on prices.

“Any dictator would admire the uniformity and obedience of the U.S. media.” — Noam Chomsky

The below CNN article from 2000 could be written about crypto in early 2019.

The first set of web-based companies emerged, evolved and then most died as hype got ahead of implementation. March forward several years and the technology sector (think Facebook, Amazon, Apple, Alphabet, Netflix and Tesla) is not only the largest sector in the US, making up between 18% — 23% of the S&P500 index, but the majority of this sectors growth only came about in the last 20 odd years. After a major market crash.

The hype cycle

The Gartner Hype Cycle is pretty accurate for most new technologies. We tend to overestimate their impact in the short term and start moaning once the hype dies down that nothing has changed. But we severely underestimate their long term impact. One could argue that right now, cryptocurrencies are on the “Slope of Enlightenment” curve, heading towards the “Plateau of Productivity.”

We’re terrible at making predictions. Especially about the future.

Historically, whenever something has great potential and money pours into the sector, think AI, automation, IoT, VR, AR, 3D printing, gene editing or blockchain, the hype arrives years before the technologies are ready for real world application. Time and time again we see this with the companies that are early to market, the true innovators, being forgotten and replaced by bigger more established entities that implement on what the hype several years earlier promised.

The difference was that crypto was the gateway to blockchain. Everyone, wealthy or poor, sophisticated or not could buy into the crypto hype which only promulgated the speculation and buying frenzy of the 2017 crypto-boom. The other aforementioned tech hypes of the last decade offered no conduit for everyday investors. Think about it, how would you have invested in cloud computing during its hype phase of 2009 or 3D printing in 2008? What about 5G of today? The point is, unless you have a lot of money and a far reaching network you simply cannot directly invest in any of these emerging technologies while they are in their infancy.

And as with any hype cycle, the craziness that accompanies rapid growth — ponzi schemes, unattainable promises of returns, parties with champagne and money flying around like any number of music videos — have come with crypto. Capital hasn’t always been allocated in logical ways, after all we are only human, and our psychology has set us up for this trap time and time again (see more about emotional biases in crypto here).

If there’s one thing we can learn from the evolution of the internet and other technologies, it’s that it just takes some time before ideas are turned into actual usable products.

So, is crypto dead?

If you focus only on the negative crypto headline rhetoric, you’ll not only forget that we’ve been here before, but you won’t notice the major new developments happening behind the scenes.

First, some background:

Back in 2013, the first major crypto bull run happened where a gain of 1,850% was recorded in late November that year. Just like in 2017, it seemed there was no stopping it, until the bubble popped.
Between November 2013 and January 2015, the price of bitcoin dropped 85%. Many people thought bitcoin was dead at this time.
2 years later, bitcoin rose back up to $20,000. If you bought during bitcoin’s failure in 2015, you would have seen a return of over 13,000%. Even if you HODL’ed and didn’t sell at the all-time-high, you’d still be in a good return scenario even at the recent lows. This isn’t even considering the altcoins who produced gains over this period that were multiples to that of bitcoin’s.

The point is, as far as crypto volatility goes, what we are experiencing now has happened before and we are not in uncharted waters.

The humming behind the scenes

You and millions of others may have lost money in the 2018 crypto crash and yes, certain exchanges have been exceptionally poor at protecting client assets which has led to several notable missteps. But this doesn’t mean that you should believe all the negative talk around cryptocurrency and dismiss the asset class as dead and buried.

What you’re not seeing is that in 2018, companies around the world invested $1.5bn into blockchain technology. In 2019, however, researchers from the International Data Corporation (IDC) are forecasting that spend on this technology will grow more than 88.7% to $2.9bn.

That’s not where the story ends though. Until 2022, the IDC predicts the industry growing at a compound annual growth rate of 76% per year, ending at $12.4bn being spent on blockchain per annum. The report highlights how nascent the blockchain enterprise spend is even after coming such a long way since 2017 which IDC researcher Stacey Soohoo labelled as the year of “awareness and experimentation”.

“2019 will be the year of mainstream adoption but will rely heavily on reshaping the ideology of a blockchain revolution”.

Stacey Soohoo

And the other major news which slips under the mainstream headlines:

And these are only a few of the thousands of news stories that get buried behind the sensationalised news we see everyday.

So, why would crypto be dead now when it’s architecture is stronger than ever before and its community more widespread than ever? Surely, if crypto was going to go to zero it would have done so before blue-chip banks started building out platforms, or ETF proposals were being tabled and regulations drawn up?

Looking ahead

The internet came along to change our lives forever. It took investment, hard work, vision, and a lot of lucky breakthroughs to achieve those little milestones that added up to hallmarks of innovation that we take for granted today such as online collaboration, payments, shopping, media, commerce, and the endless stream of things we do on the internet daily.

The vision of a decentralised future is just getting started, and blockchain technology will continue to unlock this future. Cryptocurrency innovators, investors, and entrepreneurs will undoubtedly bring about a decentralised future landscape that combines smart contracts, AI, and DApps that will forever change the human experience.

Tech that changes the world will never be built overnight. There are false starts, failures, breakthroughs and despair in this revolution, and value doesn’t always flow to the places that it logically should.