Before I accuse me of being dangerous, crypto is not doomed. Rumors of Crypto Armageddon are highly exaggerated. The provocative headline is derived from a cheeky ad that the world’s largest crypto company, Coinbase, announced at the US Superbowl earlier this year as “crypto is dead, longtime crypto”. Other crypto firms will be fighting for their lives, as they abandon their people and withdraw offer letters. The crypto market sank to a third of its peak value and some major players halted bitcoin withdrawals as an emergency liquidity measure. These accidents brought out skeptics in full force. Tech pundits who heralded the emergence of crypto, blockchain and the second advent of Web 3 began to grumble about his imminent death. In my view, neither crypto is dead, nor does it predate the eclipse of the technology behind it, the blockchain.
Before I explain why blockchain is as strong as ever, let us briefly turn to the crashing house of crypto. A lot of pundits attribute the crash to overall geopolitical and economic conditions: a grinding war, supply chain and labor disruptions, and rising inflation. What strikes people here, however, is that these are exactly the kinds of disruptions that crypto, especially bitcoin, should have acted as a hedge against. Like gold, you bought bitcoin when real-world countries and economies were in trouble. Theoretically, bitcoin and crypto should have gone up, or at least remained largely stable. Curiously, the major crash was triggered not by economic or political uncertainty, but by another real-world financial phenomenon: the appearance of fraudsters and swindlers. Terra Luna, a so-called stablecoin that had 3% of the total market, was built on the guise of hype and spectacularly fell to zero. This triggered a trust crisis in the crypto world, and an economic shock fueled that fire.
This kind of thing is not new. In 2000, an Internet bubble rapidly burst, in which hyped companies stomached-up, taking the entire dot-com industry with them. But these firms were not the Internet. Not only did online businesses survive, but today they rule the world as social networks, while map platforms, e-commerce and mobile payments drive our economies and lives. As Maria Bustilos said in The New York Times, “Crypto is just one aspect of the larger blockchain universe … and its skeptics and fans alike should learn to view it as a technological experiment, not just a blatant scam.” Or a speculative way. Money.” Eight years later, the big banks fell under the weight of exotic mathematical tools such as collateralized debt obligations (CDOs), which were dreamed up by bankers living in their parallel world. The 2008 crash was estimated to be in the region of $10 trillion; The current crypto meltdown is a fifth of that. After that bloodshed, many banks did not survive, but banking did. The same will happen in the case of crypto and blockchain. There were about 20,000 crypto coins and only a few of them would (and would qualify) “the crypto market is wildly volatile because of the underlying technology of cryptocurrencies,” says Bustillo, “but the uncomfortable and often dangerously volatile junction between emerging technologies and regular money.” because of.
While Arc Lights focuses on bitcoin and crypto, blockchain is working to solve problems in the less glamorous worlds of supply chains, financial services, large enterprises and energy. It is being used by shippers and retailers to sort out complex supply chains. Blockchain-based solutions could make remittances less painful and costly for traveling workers who must send money home. Using blockchain to authenticate educational and other qualifications could make education loans more affordable, while making them less cumbersome to store and share. Blockchain-based energy grids are trying to move cheap energy to underserved areas. Governments are testing the technology for secure identification systems. Tamper and fraud proof transaction records can be enabled. The decentralized nature of blockchain is being harnessed for distributed business models such as Helium, ‘one people Wi-Fi’, which is not owned by a telecommunications firm but is shared collectively. Blockchains are attempting to reward online art and creativity with NFTs, while powering parallel (if unproven) worlds like a metaverse and laying the groundwork for a ‘maker economy’.
The crypto world has been rocked and some of its biggest structures are collapsing. But it’s not the end of the world, just that the tectonic plates of its infrastructure are slipping and sliding as they attempt to release creative energy. Blockchain and crypto live.
Jaspreet Bindra is the founder of Tech Whisperer Limited, a digital transformation and technology advisory practice