The true value of crypto has always come up in debates about the asset’s long-term growth potential. Some argue that if cryptocurrencies were able to function as a store of value, that would instantly give them all the necessary influence and potential to reach the state of mass adoption. A wider group of entrepreneurs however, are starting to believe that the true value of crypto is the ability to create decentralized networks. These networks ultimately lead to new forms of business.
Crypto is unique. Not only because of its revolutionary prospects, but because a new asset class is not created out of thin air. Last year saw the biggest crypto rise yet. This price increase affected everyone from retail investors to institutions and governments. Of course the sky high price was not sustainable, but the true value of crypto was revealed and many investors and institutions began to make long-term plans for it.
This is why this year’s price drop is anything but surprising. The dot com bubble back in 2000, saw NASDAQ fall 72%. Amazon lost 95% from $107 to $5.96 in 1999 to 2001. This important to note not because of the drop similarities, but because of the aftermath ones.
The dot com bubble taught investors that if a company wants to have sustainable value, it must have real utility. A store which sells accessories for pets isn’t the most promising prospect. A simple online bookstore with the option to become the literal “store for everything” is a whole new story.
True value remains unchanged, despite the market’s woes
This is a clear indicator that despite the harsh market conditions, the true value of crypto hasn’t declined at all. The centralized business models of today, will most surely, not the business models of tomorrow. The decentralized model will take some time and a lot of effort, but once it gets working it’s a brand new horizon for investors, businesses and governments.
So the next few years should provide answers when it comes to the development. The most important area, which needs to be worked on as soon as possible by retail is to create a sustainable ecosystem to empower institutional investors.
Participation by institutional investors is widely discussed in the recent months, but it’s going to take a lot of regulations and work to get that going. It’s also extremely important to note that cryptocurrencies are literally the only asset in history, which was not started by the institutional front. This has resulted in an ecosystem brimming with potential, devoid of institutional infrastructure.
2018 has shown that the infrastructure however, is well on its way. Crypto has moved beyond the retail market and ICE, NASDAQ, Microsoft and others have all started initiatives or begun investing. Global regulators are also already setting up all the necessary foundations for a solid entrance from institutional fund managers.
Another key area, which needs advancement is the adoption of decentralized networks on the protocol level. New opportunities, mean new startups. While most of them probably, won’t succeed, the ones that do will be instrumental in gathering larger adoption, thus the true value of crypto will be realized.
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