Back to the list

Future of Digital Economy: The End of The x1000 Profits

Daniil Danchenko

Again, bitcoin has issues. Again, with its value. A lot of people will say “That does not sound like anything newsworthy.” And they are somewhat right - bitcoin rallies are part of the daily life in crypto, and anything but uncommon. Speculative traders, volatility, 51% attack, dependence on the social opinions - that's just a top of the iceberg. So, does it mean it’s time to get out of the dodge and sell everything? After all, cryptoapocalypse is closer than many enthusiasts think.

There is a number of reasons, and one of them is indeed short and speculative traders. But it’s safe to say that they will be the first to go away considering great changes coming to the market. Up to 2018, institutional infrastructure in the cryptoverse was pretty much non-existent, the legal framework was vague, and a net was plagued by the stories of guys that had “a dream and a white paper.” But ironically - the folks that have started at that very point are openly saying that this is not going to happen ever again.

More and more people know what is crypto, along with blockchain and virtual economy, and no one can reasonably expect that previous hype is going to repeat itself. But this is not as bad as many would have thought. Because infrastructure for big institutional and private investors is on the way.

This is a reason why more and more people consider crypto a legal and reliable medium of investment and storage of value. Just a year ago, back in 2017, almost everyone was looking at the digital currency as a borderline gray area financial tool. And now, a lot of leading business experts are suggesting crypto as a way to hedge the money.

Because a lot of them believe, that ETF is going to be a real rocket boost for the bitcoin. And if bitcoin is going up - cryptocurrency, in general, is going up as well, which means that crypto assets and the digital economy are facing a new cycle of development.

Before that development of the crypto was looked like a bubble. There was a short period of steady growth, but then the value drops followed. Traders panic and sell everything, the value drops even harder. And then we observe a correction when prices stabilize. This is the economic climate that was heavily influencing crypto, and it’s far from being ideal. It’s hard to make reliable models of this type because the logic and the general law of economy is not functioning as they should. That was also attracting outright scammers and speculative traders, coming up with “safe and sound” projects based on a “pitch-presale-ICO-profit” model. And it’s easy to guess that hundreds of complaints from investors had been liberated from their disposable income (or their lifelong savings) were driving regulators mad. And by thus, they made their opinion about crypto negative by default, which was not healthy for the cryptocurrency market whatsoever.

But now conditions are changing, it’s more like an evolution. Because of the bearish dominance on the market, people oriented on the super short-term profits are leaving the game. Short trading becomes harder, legal boundaries become stricter, and securing funds for an ICO with only an MVP and sound presentation is hardly viable. There are some notable exceptions, but those are exceptions that prove the rule. ICOs these days start with a couple of practical use cases behind their belts when they go public because no one in the cryptoverse believes in the x100 profits any longer.

Does it mean that wild-wild west of the crypto is finished? Well, it appears to be so. In fact it strays pretty far from its original idea. Today we already have companies able to dictate their own rules to the market, 97% of all the bitcoins belong to 4% of the wallets.

Time of the crypto cowboys and daredevils is passing, but well, golden rush did too. Up next we are going to face “Roaring Twenties”. More and more companies are getting their own crypto or creating their own financial tools. Some relate the reasons of recent drop of bitcoin value with a singular whale liquidating the crypto that used to belong to the head of the famous darknet marketplace “SilkRoad” - are remnants of the past.

Cryptoverse is heading towards the high society. With terms like AML, KYC, CFT and almost philosophical questions about what crypto is more to the Satoshi’s original vision. Crypto is growing out of its sandbox with crypto kittens while building the true digital economy. But the main thing is - crypto desperately needs to avoid “dirty 30s”  that came after the “roaring twenties” and new “digital great depression”.

Back to the list