While the price of digital assets may have suffered — the cryptocurrency industry is only just getting warmed up…
Crypto has been ripped to shreds by the claws of a bear market. There’s simply no denying it.
Aside from last month’s relief from “down only” — the past 8 months has seen the blockchain industry as a whole has jettison more than 60% of its total value with nearly US$2 trillion wiped from the space entirely.
And so, it becomes all too easy to believe the increasingly loud cries of critics, emboldened in their claims that crypto, NFTs and anything Web3-related has a one way ticket to an early grave.
Interestingly enough, a lot of the broad brushstroke claims made by the critics are actually correct — just not in the way that they think…
The Blessing of a Bear Market
One of the most common criticisms is that there are too many “useless” or “scammy” crypto & blockchain projects in the space and, you know what? That’s a fair assessment.
However, a bear market and the huge market-wide devaluation that comes with it, serves a crucial function of wiping out the opportunistic and exploitative degenerates.
These enormous capital capitulations clear out the bad actors who’ve built their projects on speculation, massive amounts of risk, ensuring that only the teams with a real vision, solid fundamentals and genuine methodology for future adoption will remain.
To borrow a popular phrase that did the rounds at NYT NFC:
“It’s not a bear market. It’s a build market.”
While the current environment may be a brutal place to be as an investor who accumulated large amounts of crypto throughout 2021, but as a long-term investor lower prices equal an opportunity to accumulate.
Crypto is Already the Native Currency of Web3
In case you were curious about the actual use case of cryptocurrency — it’s literally the foundation of the internet economy. Every single day, tens of thousands of people trade millions of dollars worth of Ether (ETH) and other cryptocurrencies in exchange for digital goods and services.
So, to any critic who’s still repeating “bUt wHat iS cRypTo us3d f0R?” all you have to do is look at the daily trading volume on Opensea or Rarible and there’s the answer. Despite the tanking prices of web3-based assets, a recent Telstra report found that boots-on-ground blockchain developers have never been busier…
There’s no denying that right now, web3 is very much overhyped by a plethora of venture capitalists and tech bros. However, this shouldn’t detract from the fact that web3 and its burgeoning economy already exist right now, and the entire space holds enormous potential to revolutionize the way humans interact with each other online.
Instead of major tech companies like Google, Facebook, Netflix and Amazon controlling every aspect of what happens online, blockchain-based Web3 technology gives individual people far more control over their behaviour, data and finances online — something that’s pretty important considering how much of our lives may be on the internet moving forward.
Web3 might be one of the most revolutionary things to be released into the world of modern man, it’s just been surrounded by way too much hype and shit tonnes of free money, brought about by years of low interest rates and government stimulus.
NFTs Are Only Just Getting Started
Another huge part of the bear market hysteria is wrapped up in the devaluation and denouncement of NFTs as though they’re a single entity, and not a thriving industry filled with hundreds of thousands of unique projects and talented artists.
With that being said, I still think that an absurd amount of existing NFTs are total garbage, whose (formerly) sky-high prices were either really good marketing, or straight up money laundering.
But you’d have to be an absolute idiot to ignore the fact that this status-associated, proof-of-ownership technology is on the cusp of releasing a revolution in how we as humans do gaming, art, sports and culture moving forward…
I will grant the critics one thing though: in web3 and the associated NFT space, there remains an enormous issue with value extraction, where developers and project leaders vacuum up huge sums of money from communities without ever delivering much more than a very expensive jpeg (insert “right-click save” meme here).
I recently stumbled across a project that totally flips the switch on this all-too-common problem: a soon-to-be-launched collection of 8,888 NFTs called Hoop Hounds by Australian NBA media company Basketball Forever.
This project seems to be value-injecting, by delivering value to their fans in a way that the world of Web3 has never seen before. When a fan mints an NFT, they get real-world utility instantly. If you go and mint a hound wearing a pair of black headphones, you get those headphones in real life.
If you mint a hound wearing a rare pair of Jordans, the physical version of those shoes gets sent out to your mailbox. If you’re lucky enough to mint a Hound wearing an NBA strip, you get the chance to fly to that team’s city, be hosted in a hotel, and sit court-side to watch that team lay it down.
Other Australian projects like Deadfellaz are also great at building communities around digital art and identity online.
Short Term Fail, Long Term Win
Ultimately, there’s a good chance that crypto may continue to “fail” in the short-term, especially as the temperamental Fed will almost certainly plunge markets into the red once again because of some new-found labor market overconfidence.
I do expect that there’ll be some further industry decimating price action — however, I’m pretty convinced that crypto and the nascent web3 industry will blossom in the long-term, there’s simply far too much development and “buidling” going on for any other alternative.