Amidst the cryptocurrency bloodbath, it appears digital assets and blockchain technology are losing some of their biggest advocates.
Chinese investors have taken note of the cryptocurrency market’s $706 billion loss over the past year, and they’re not pleased about it. In fact, many are claiming that blockchain doesn’t have the prowess and power it once boasted, and that any such statements were fabrications.
Bonnie Cheung – a venture partner at 500 Startups – describes the present period surrounding blockchain and cryptocurrencies as one of “disillusionment.” She comments:
“As much as I am a believer in the long-term disruptive power of blockchain, it cannot solve all the problems in the world. You don’t know how many times we have read proposals that claimed to solve all pain points for almost every industry… How do you convert an investment that started as a venture deal to something that ended up almost like a bond? Can you lend that bond? These are all interesting questions that will need to be answered in the future.”
Nothing Big Has Happened
It has been ten years since Satoshi Nakamoto published his original whitepaper regarding bitcoin. To this day, there have been no “killer apps” or even transformational platforms regarding real-world applications of blockchain. In addition, bitcoin transactions – where blockchain likely held the most ground – have fallen by roughly 80 percent from January through September of this year.
He Ning – COO of QOS – claims:
“What has been reported by the media that around 40 percent of blockchain projects have shut down is too conservative. For any industry, around 20 percent of startups should fail when the sector’s market value drops ten percent. With the kind of market collapse the crypto market has seen lately, almost all speculators have left, but that’s far from enough. I feel it takes around getting rid of 99 percent of crypto exchanges and unrealistic projects for a new wave of bull market to arrive.”
Now’s the Time to Step In
Despite these and similar cases of gloom and doom, others are looking at what’s occurring in the industry as a necessary “shakedown.” Some believe that the present circumstances will rid the crypto arena of any fakers and phonies and say this is necessary to get the blockchain space back to a healthy position.
Hubery Yuming Yuan – CEO of Huobi China – is one of those figures. He left a position with the brokerage firm Industrial Securities to join Huobi last March. He recently commented:
“The blockchain industry has flushed out some poor-quality projects, and the entry barrier to the industry has increased, which is beneficial to the sector’s future growth. The [crypto] bubble burst has led to a more rationalized industry, and we have seen more practical attempts at blockchain applications. Solid public blockchain projects and numerous popular decentralized apps are gaining momentum. Chinese enterprises and conglomerates continue to explore new blockchain use cases. Unlike steam engines, electricity, computers, artificial intelligence and quantum computing, blockchain is not a productivity revolution. Blockchain is similar with printing, papermaking and the internet. It can liberate productivity even though perhaps it does not represent a fundamental technology breakthrough.”
The Bitcoin Crash Continues
Bitcoin has garnered some serious flack over the past few weeks. The currency initially fell into the $5,000 range after trading at roughly $6,300 for several weeks in anticipation of the upcoming bitcoin cash fork that took place just a week prior to Thanksgiving. This hard fork was the subject of extensive controversy that pitted many industry leaders (i.e. Craig Wright and Roger Ver) against each other and led to serious price declines for the father of crypto.
Following the fork, bitcoin began sinking further into the $4,000 range, and then dropped to less than $3,600 during Thanksgiving week. At press time, it is trading for just over $3,800.