What to make of the cryptocurrency bubble

February 14, 2018

 

On one hand, a bubble brings attention and investment, which theoretically accelerates innovation.  It’s painful for many investors and entrepreneurs as the bubble will eventually burst.  But from its ashes, something beneficial emerges as it did during the dot com era.

 

On the other hand, the price dynamics of the “crypto tokens” and associated transaction costs have become punitive and prohibitive.  This has built a barrier to entry for the non-speculative uses of cryptocurrency.  In essence, the mania and chaos surrounding the industry is stunting the emergence of potentially beneficial applications.

 

Once the speculation diminishes to reasonable levels, fundamental value propositions will emerge and drive the industry, allowing for the truly deserving business propositions to take center stage.  Remember unique users driving dot com valuations as opposed to business models?  We’re witnessing a similar phenomenon in cryptocurrency.

 

The exciting part is that we are witnessing a revolution that will change the world.  The bad news is that revolutions are always messy.

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