The Cryptocurrency Market Collapse, a Blessing in Disguise
Charles Darwin said it right when he said it is all about the survival of fittest. Today the cryptocurrency market is proving this in more ways than one. With losses of over $30 billion and market capitalization losses of 12% and more in one week, many have started to either criticize the whole concept of cryptocurrencies or have bailed on it altogether. Yet there will inevitably be some that will stay on and hold onto what they consider to be valuable cryptocurrencies. These cryptocurrencies or tokens will survive because they hold an inherent value that transcends the woes of the market.
No going back
Once something is brought into this world and created it never truly dies, it just changes form. The cryptocurrencies could inherently become security asset backed tokens, or stable coins, or even a central bank backed digital currency, or a more scalable, cost effective cryptocurrency, but it will not go away. Once you have had a taste of seamless, cost effective, secure, private money transfer you can never go back to the old ways of trading, doing business, and transferring funds. Imagine people using horses to get to work after the invention of the car. It would be nonsensical.
So let us be clear about two things, blockchain as a technology that enables secure, quick, storing and transaction of information on digital assets is here to stay. The number of proof of concepts, use cases is growing daily in all major sectors and across governments around the globe. Many professionals are leaving their jobs at IBM, Microsoft, SAP, and banks to open blockchain startups. This is indicative of their belief that this technology will not be dying anytime soon.
So blockchain will not die, and as such the inherent payment mechanism of blockchain networks will not die either. Change takes time, but change is moving at a faster pace than before. For example the first introduction of cloud based computing started in 2006 and only until today did it become mainstream. But blockchain started just 10 years ago and has made unprecedented waves so far. Blockchain is here to stay, crypto is here to stay, and the concept of global crowd funding whether it be ICOs or STO (Secure Token Offerings) are here to stay. Binance Chief Executive Officer Changpeng Zhao is convinced that ICOs are here to stay as they are better than traditional VC and he adds that even large VC funds have invested in ICOs.
The way forward
There is a growing sentiment in the corridors of the crypto community hinting to the fact that institutional investors will enter the crypto scene soon. It will come when the price is reasonable for these investors, when the value and return on investment is definite. Statements from Morgan Stanley has said that Bicoin is a new institutional investment class because as a distributed ledger it makes it easy to process retail payments and e-commerce as well as peer-to-peer cross border transactions. Even Fidelity has created a crypto services division and others will follow suit.
It is no coincidence that IMF Managing Director Christine Lagarde spoke about digital currencies recently at the IMF event, urging banks to consider the possibility of issuing digital currency to supply money for digital economies and people who are asking for more digital services. And it is no surprise that some will be resistant such as the member of EU Central Bank Benoit Coure who says it is unlikely within the next decade to see central banks issuing digital currencies.
What is likely is that countries in Asia such as Singapore, China, South Korea and others will be looking into this more seriously as they move to drive economic growth and fulfill the needs of their youthful citizens who are hungry for a more transparent, quick, safe and private form of transaction and doing business. The same is happening in the MENA region particularly in Gulf countries such as the UAE, ksa, and Bahrain who are building Smart Cities, coupled with IOT, Artificial intelligence and blockchain in an effort to spur innovation and economic growth for decades to come.
So despite the recent market crash, it is still just the beginning. The crash is a blessing in disguise because now the topic of regulation will take on a more concerted effort, the blockchain technology will become the center of attention, and the surviving cryptocurrencies and tokens will be those that hold true value in both their proposition as well as infrastructure. Institutional investors as well as the general population will come together and invest in what they believe will succeed.
And maybe just maybe.. the traditional market players be they financial institutions, governments, and others will realize that they either jump on the digital bandwagon blockchain and all, or they eventually move way for the cars and trades of the future.