Cryptocurrencies have “plumbed new depths”* The MVIS CryptoCompare Digital Assets 10 Index has fallen 80 per cent since January. This represents a bigger plunge than when the Nasdaq Composite Index dropped 78 per cent following the dot-com crash in 2000.
This, of course, does not mean that cryptocurrencies won’t eventually recover and prove to be a wild success the same way the Internet 2.0 revolution erased all – or at least most – of the bad memories from the dot-com crash. Remember, you could buy stock in the book-selling website Amazon for $1 when the bubble burst. But it’s become clear that the wild days of Bitcoin’s meteoric rise last year – when it seemed like anyone could get “hilariously rich” – are dead and are not coming back anytime soon.
Like their predecessors during the Internet-stock boom almost two decades ago, cryptocurrency investors who bet big on a seemingly revolutionary technology are suffering a painful reality check, particularly those in many secondary tokens, so-called alt-coins which are an attempt to replace money.
“The blockchain space is getting to the point where there’s a ceiling in sight,….If you talk to the average educated person at this point, they probably have heard of blockchain at least once. There isn’t an opportunity for yet another 1,000-times growth in anything in the space anymore.” **
The obvious next step for cryptocurrencies then is to function as tokens in the Blockchain and some as an actual currency in the real world. Not something that seems to function as a symbol of the true believers’ dogmatic views about governments and markets. There will continue to be volatility as they work to become a functional currency. There will be lows that wipe out the highs. But that’s fine. In 20 years time, we may look back on the cryto bargains as we do now on surviving .com bargains
*Bloomberg **Vitalik Buterin, co-founder of Ethereum