2017 showed us the potential of the fledgling crypto industry. We saw the total market capitalization rise from $17 billion in January to eclipse at $800 billion by the end of the year. However, so far this year it seems crypto markets had been in a downward spiral- losing over $500 billion in value. Numerous factors can contribute to this volatility including market equilibrium, increasing regulator interest, tax obligations, lower ICO activity, waning sentiment, and significant market sell orders.
Despite this, we see more and more governments and legacy institutions get involved in the crypto space. This bear run is different in several ways than in 2014. VC activity indicates this emerging asset class has more to offer than what’s seen on the surface. Meanwhile, companies like Coinbase, BitPay, and Robinhood are racing to produce value to keep steadfast growth in this young industry. The brain drain from Wall Street and Silicon Valley is climbing. Narratives are also changing again. Whereas there were a fixation and emphasis on ‘blockchain’ over cryptocurrencies in the past months, the interest is now in security tokens. And new exchange registrations are still scarce.
These solid fundamentals keep me enthusiastic and optimistic about the direction in which crypto is heading. It’s an ever-expanding social, interdisciplinary field presenting chances for involvement. Crypto is a melting pot of economics, finance, philosophy, game theory, psychology, networks, politics, cryptography, history, and many other disciplines. It presents an opportunity for continuous research and learning for the eager mind.
Crypto gets compared a lot with the dot-com era, so I think it’s worth mentioning a parallel that I see. When Cisco went public in 1990, it had a market cap around $224 million. It peaked in 2000 commanding a $515 billion market and more than 10% of the entire internet ecosystem. The explosion of the internet can be attributed to Cisco’s routers. Specifically, it addressed the internet’s problems of scaling and interoperability. Today, these same problems can be linked to impeding crypto adoption and integration. Blockchain technology can’t easily scale, rendering it secondary to companies because it can’t operate at the speed they require. Also, Bitcoin, Ethereum, and other crypto networks all speak different languages and can’t understand each other. As networks transition from centralized to decentralized ledgers, technologies will need to be developed to address interoperability and get these different networks communicating with each other.
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