Crypto is not a fad. Crypto is an inevitable extension of fintech, an evolution allowing functionality and security never before possible. This is not an opinion; this is a fact
Speculators look at every market, and for better or worse, no market is driven just by its functionality. In crypto, the first speculators saw Bitcoin and opted to buy in believing, correctly, that crypto will create enduring solutions that would fuel long-term growth.
The second wave of speculators saw this group buying into cryptocurrency, maybe only somewhat understood the reason, and many bought in assuming their nerdy friends knew what was happening. The price began to rise.
The third wave saw the price of these tokens rising from the previous waves of buyers and understood that more people would want crypto as the rate continued to rise. This is when the marketplace saw significant a shift: from the technology’s potential to perception of its value.
When people ask, “What gives Bitcoin (or anything) value?” The answer should be “What Bitcoin can do,” or “what it will do,” never, “Because people believe it is valuable.” When enough people believe something has value solely due to communal belief, that’s called a bubble. For example, fiat has value not just because it’s perceived to have value, but because that value is enforced, which creates function (buying).
When the price becomes based solely on confidence, that’s when the market begins to outpace its functions.
This happened as waves of speculators came in with no understanding of the market and dumped money into blockchain, always betting that somebody else would come in to drive the price up. Increasingly, price began to detach from function, and scams began to thrive on enthusiasm paired with ignorance.
Which brought us here, a moment wherein immense sums of wealth are stored in Bitcoin and other crypto which the owners only bought it because they were seeing the price skyrocket. What happens when that shaky confidence based only on price begins to fade?
A correction.
There’s a limit to rise from speculation for any market because there’s a limited amount of wealth that can be pumped into the market. The stock market is currently experiencing a correction — dropping 10–20% of its stored value as speculators shed holdings powered by overambitious confidence — and it does this about every two years.
Crypto is also seeing a correction because the current crypto market is largely about confidence, not function.
Last year was the Year of the ICO. Now there’s a ton of speculator money pulling out of the system as many of these ICO tokens aren’t delivering. The fact is, most ICOs have been locusts, feeding on the confidence created by productive projects such as Ethereum.
The lack of regulation and consumer protection mixed with an enormous influx of speculative activity inflated the market. The market is now correcting as those trashy ICOs are chilling confidence.
This is a good thing, even though quality tokens are getting caught in the noise, it doesn’t matter — in the end you’ll see by the process of elimination, long-term, strong projects are going to thrive because this frost is killing all the insects.
This will continue until the market is again powered by the people investing in a technology (rather than speculating on price) and the swarms of scams is wiped out, and a similar correction will surely happen to the crypto market after booms in the future.
As this happens, just about every token, from the mighty Bitcoin to the shittiest pump n’ dump, is going to flex back and flatten. Tokens with actual use will recover in the long term as users buy for their functions, not abstract speculation.
No matter what, follow Bitcoin. When it goes down, everything goes down. When it goes up, same thing. Because Bitcoin is paired with everything and the most widely-owned and used token, this makes sense. Blockchain is the riverbed, but Bitcoin is the water. Its tides will lift or lower everything else.
But the fact still remains that crypto creates a transaction security, velocity and ease that will rewrite fintech across the world. This technology is still fewer than ten years old, and is dependent on networks of users, vendors, infrastructure and innovators to grow.
A correction is a sign of health: it prevents bubbles and means fewer people are going to fall for these scam coins while regulatory agencies begin to understand this technology. It’ll be great to see the pressure off Ethereum as it becomes harder to run an ICO off the back of an exhausted community.
Security tokens are on the way, along with security-approved exchanges. That’ll bring a completely new type of capital to the crypto market and will require a certain level of commitment from the companies involved. This should help create a safer market where more projects are able to thrive in a more stable environment.
For UnikoinGold, this correction is fine. Unikrn is focused on creating long-term stability for users and maximum long-term token strength. We wouldn’t reach that point in a world where the market didn’t correct itself; stability (including stable growth) would be impossible.
Our platform has been live with functionality for months, and it’s continuing to improve on a day-by-day basis so UKG can bring gamers and esports fans an unprecedented, smooth (and otherwise impossible) experience.
We know crypto is a disruption, not a fad. We are building for the future, not just the present. We are building for function, not just perception. That’s not an opinion; that’s a fact.
Hey one more thing — when someone asks you why Bitcoin is valued at ~$10,000, tell them this;
The total gold market is worth 7 trillion dollars and the entire crypto market (including all the altcoins) is worth somewhere around 300 billion (ish?). Bitcoin is fungible, more portable, way easier to transact than Gold. Bitcoin is *really* finite, and traceable. Whereas gold is mostly paper traded, and there isn’t enough gold out there to cover all the paper. Gold to me is the biggest ponzi on earth — and unfortunately many people don’t get it — but I guarantee you younger generations do get it. This is why gold will become less relevant, and Bitcoin will replace gold as the store of value in the future.
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