Crypto markets: Where do we go from here?

It’s been nothing but negative news and price drops for over a year now following the crypto market mania that began in 2017 and lead us into January 2018.

What a difference a year makes. After reaching a peak market value of over $800 billion USD in January 2017, the market has since gone into a year-long plunge reducing overall capitalization to under $125 billion. And this occurred whilst a veritable explosion of new coins and tokens were created, spreading the total market cap over a much broader range of crypto assets. Some would say, including this author, that this sudden burst of new coins played a large part in the market drop.

Market value graph 2018
Total crypto market capitalization from the late 2017 run up until March 2019

As more and more tokens and coins were created solely as money grabs, investors finally started seeing through the noise and hype to find that the world doesn’t need thousands of cryptocurrencies, utility tokens, and asset tokens. Resources don’t need to be tokenized. Assets don’t need to be tokenized. Charity doesn’t need a cryptocurrency.

However, the world still needs blockchain technology, and some blockchains will requires cryptocurencies and tokens. While I might not need a special token that allows me to own one ten-thousandth of a semi-famous painting supposedly stored in a warehouse somewhere, I could certainly use a universal transactional cryptocurrency like bitcoin to order a print of that painting from a gift shop halfway around the world from the US without dealing with paying in USD versus euros, pounds sterling, rupees, or any other currency. Instead, we can all just use bitcoin or whatever becomes v2.

The world also needs secure trackable asset verification tools to fight counterfeiting, to ensure safety of pharmaceuticals and foods, to fight financial fraud, to register assets and land records, and to keep governments and banks honest. There are far more fake Rolexes than authentic Rolexes in the world. Wouldn’t it be great if Rolex could tokenize its record system and tag its watches so that buyers could determine authenticity with just a few keystrokes? (See our supply chain articles discussed here.)

In short, the world needs blockchain and crypto. Companies now must find ways to produce functioning products that have or add value, that have compelling use cases and that create their own worth rather than relying on market hypes and bubbles to raise values to unsustainable and unjustifiable levels.

So what’s next for crypto? A maturation stage where all the junks falls away, the current projects that have been diligently continuing to develop their networks while ignoring the market swings start getting the attention they deserve, and where new projects that haven’t even yet been conceived are created and come to market with uses we didn’t even know we needed. Think of all the things you do daily with your smart phone that you never thought would even exist 20 years ago, Now fast forward to 2025 and imagine your banking apps, games, Uber, and other services running on your mobile device tethered to an underlying crypto network for micro transactions. It will happen; it is coming.

From the market standpoint, this will be painful. Many currencies have lost 90% of their value, and a lot of them will drop to zero. Many of the recent ICO’s will fail almost immediately. You can’t have a business without a product. Creating a token on the ethereum network and assigning it a function is not the same as creating a product. Until a product is developed, your token will have no value. A product that has a function that people are willing to pay for. Value in business is created by offering a product or service that customers need or want and are willing to pay for. Ask yourself how many cryptocurrencies can meet that definition of value right now in early 2019. Almost zero,

Crypto isn’t dead, but most cryptos are. Try to sift through the garbage, let the massive amount of junk die, and watch for the valid projects to lead the next wave of the crypto market. The smartest and richest investors that survived the great internet bubble did so by focusing on round 2. Crypto is staring round 2 in the face. Be smart and look to run with the projects ready to move into this next phase.

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