The Growing Pains of Cryptocurrency
No one said the rise of cryptocurrency was going to run smoothly; and if they did, they were probably trying to sell you something. In the past couple of years, cryptocurrency has gone from a niche interest, a pet project for computer geeks and bored investors. Now, it’s impossible to avoid hearing about. The past few months in particular we’ve been witness to one of the most exciting, befuddling, and nail-biting industry explosions of the 21st century.
The news about the astronomical rise of cryptocurrency prices, Bitcoin leading the way of course, and what the implications are, has been dominating headlines. You know a technological and cultural trend is getting big when you’re mom has heard about it. The tail end of 2017 saw Bitcoin and a league of other crytpo coins in a nearly unbelievable upwards trajectory towards staggering numbers that no one could have predicted a few years ago. But even as the rise was happening, along with those numbers grew an persuasive, unsettling worry in the investors and crypto-believers about the sustainability of this trend and the drop of the other foot. And then 2018 started. Bubble, meet burst. Or, so it might appear.
The tail end of 2017 might have brought unprecedented notoriety and success to the world of cryptocurrency, but the beginning of 2018 has swiftly followed this up with a tailspin. To many, this was far from unpredictable. But is this story really so simple? A quick and fevered rise followed by a quick and disappointing fall? A flash in the pan financial fad? Just like the technology itself, things are little more complicated than they appear, and it may very well be that the past few months, and the years of build up to them, are nothing more than the beginning of the tale of cryptocurrency. We may be experiencing what one might call the “adolescent years” of blockchain and cryptocurrency technology.
The hardest thing to hold on to when you’re neck deep in speculation and trading isn’t your coins, but your perspective. In other words, when it comes to markets of all types, the bigger picture is the important one. What might seem like a monstrous rise and a heavy spiral down now could very well just be the growing pains of this new technology and the movement it’s powering. And it is this movement, the cultural ideas and paradigms behind cryptocurrency, that will make up the backbone of this story. The money angle is important of course. But while, to the uninitiated, the rise and current downward path of Bitcoin might seem like nothing more than a frenzied gold rush, what really makes cryptocurrency special is not the potential to make a quick buck or fortune, but the technology behind it and what potential it has to change the world.
That sentence, in and of itself, could be the tagline for a whole book of information and speculation on its own, but, suffice to say, this is more than a bubble and burst story. To illustrate this with a little bit of “history repeats itself” reflection, ask yourself: what’s the first thing you think of when you hear the terms “bubble” and “burst”? The dot-com bubble, almost certainly. For those who need a reminder, Wikipedia sums it up quite concisely: “The dot-com bubble…was a historic economic bubble and period of excessive speculation that occurred roughly from 1997 to 2001, a period of extreme growth in the usage and adaptation of the Internet by businesses and consumers. During this period, many Internet-based companies, commonly referred to as dot-coms, were founded, many of which failed.”
Sound familiar? This may be a pattern that is repeating again. But what was the ultimate legacy of the dot-com bubble and burst: the pervasive expansion of the internet and its usage into almost every facet of society of course. And we may be looking at something similar when it comes to cryptocurrency, blockchain technology, and the decentralization of the web, security, and the economy. “May” is an important part of this statement. Because the truth is, no one knows what’s next for cryptocurrency, but we’re very likely not looking its end, despite how it may appear when looking at the smaller picture.