People who haven’t embraced cryptocurrencies continue to exclaim that Bitcoin is in a bubble, and so many people will be hurt when prices crash back to more rational levels. This seems to be especially prevalent in traditional banking and finance, although there have been some progressive thinking fund managers calling for the bubble to inflate exponentially before it pops.
This might not be a popular opinion, but I think they’re right.
The Bitcoin and cryptocurrency bubble will pop eventually.
The good news is that this won’t be the end of cryptocurrencies, but will actually be the beginning of a more golden age for the sometimes controversial asset class.
You see, right now is a period of discovery and euphoria surrounding the cryptocurrency space. There is so much potential in the blockchain. So much good can be done. So many changes can be made to conventional centralized methods of doing business. The future is here.
It sounds quite similar to the euphoria surrounding the internet in the late 90s. As we all know, that bubble popped, but the companies involved in the internet (for the most part) came back stronger and more stable, and created amazing wealth for those who got in early.
Recently, the creator of the Ethereum network and the Ether token, Vitalik Buterin, said that 90% of all tokens will fail. And he is correct, and possibly even conservative in that number. There are simply too many new tokens, many doing the same thing. This will eventually shake itself out and only the strong will survive.
But it is exactly this type of evolution that will make the entire cryptocurrency sphere stronger and more resilient. Once the bubble pops and the strong tokens come back stronger than ever, the role of cryptocurrencies will become more certain, and then the real working networks can begin to be constructed.
We are just 9 years into the blockchain era, and while it seems everyone is working towards solutions using the new technology, there is really little to show for all these efforts other than mounds of white papers, scores of new cryptocurrency millionaires, and loads of speculative trading in altcoins. The Dapps we have now are akin to Netscape navigator in the late 20th century, and transactional speed on the blockchain is like a 14.4k dial-up connection in 1996.
And that’s fine because this is just the beginning. When the internet bubble popped we saw companies vanish literally overnight, and even the strong players saw the value of their companies falling by 90% in a matter of weeks. The same can and very well may happen with cryptocurrencies. But out of the ashes will arise the leaders of tomorrow’s decentralized economy.
The 10% that make it through the popping of the blockchain bubble will be the Google, Amazon and Facebook of the future. They may also be the JPMorgan, Wells Fargo and Visa of the future. And could be the leaders in many other fields, not to mention the asset class of choice for individuals, businesses and even governments.
Right now we are seeing the innovators who are literally creating something from nothing. They have no prior successes to build upon, no business models they can follow, and no working templates. They are working from a clean slate, and with that starting point it isn’t surprising if 90%+ fail.
It won’t matter if 99% fail though, because the 1% that succeed are creating a new future for the world. Blockchain technology, triple entry accounting, and cryptocurrencies are the most important invention of our era. They are setting the stage for advances in economic development, supply chain, energy, healthcare, and artificial intelligence the likes of which have never been seen, and can’t even be imagined yet.
The breaking of the Bitcoin bubble is simply the next step in the evolution of the blockchain environment. Yes it will be painful to some, but once the smoke clears we will see new uses and interfaces that will dwarf what has come before. Market capitalizations for Bitcoin and other successful ventures based off blockchain technologies will be counted in the hundreds of billions, if not trillions of dollars.
If history is a clue we could see these developments emerging within 2-3 years after the bubble pops. Get ready y’all because that’s when the fun begins!