The current crypto winter has had no shortage of negative headlines, but that shouldn’t overshadow the opportunity that the current price declines present to market participants. During bulls, bull markets, and other periods of market optimism, the focus is less on fundamentals and more on rising prices. While a rising tide does indeed lift all boats, it can also overshadow hidden issues that come to the fore during times of uncertainty and falling prices. As painful as bear markets can be for investors and as disruptive as the current bear market has been – with multiple bankruptcies and possible regulatory repression – there are opportunities to develop more sustainable applications that use blockchain and crypto-assets.
One aspect that has been constant, since bitcoin entered the mainstream in 2016, is the continuous back and forth between proponents of blockchain technology applications and those supporting individual cryptocurrencies. , tokens or other tokenized assets. Both elements will undoubtedly have a role to play in the future of how data is stored, processed, transferred and ultimately analyzed by market participants. What remains to be seen, however, is how much of the balance and momentum between different subsets of the crypto market – decentralized finance (DeFi), non-fungible tokens (NFT), Decentralized Autonomous Organizations (DAOs) or Central Bank Digital Currencies (CBDCs). ) – will prevail.
Crypto winter has arrived, and this should be seen as an opportunity for market players to design and develop better and more innovative solutions. Let’s take a look at two issues that should be a priority for developers and investors as the crypto winter continues to roll on.
Functionality on price volatility. A pervasive thread running through the crypto-asset market has been the specter of get-rich-quick schemes and a heavy (investor) focus on the ability to buy tokens that would rise in price significantly. Such activities and actions are signs of a healthy market and should not be artificially suppressed; financial and intellectual capital is attracted to areas that produce higher rates of return. Rather, one approach that could serve developers and organizations well during this time of depressed pricing is to focus on app functionality rather than just paying attention to associated token prices.
Examples of such an approach that are beginning to show up in the market include, but are not limited to, blockchain-based applications connected to health records, academic credentials, and property records. In order to gain the trust of the non-expert market, which is much larger than the crypto-native or crypto-expert space, there will need to be a focus on use cases and functionality rather than just using crypto as a speculative investment. .
In other words, blockchain and crypto-assets will need to operate and attract a much larger audience than investors looking for rapid price increases, which is good for the health and sustainability of the industry in his outfit.
Payments need to matter. Despite the rush to develop new and innovative applications in the crypto-asset space, the initial (and some would say most powerful) appeal of crypto is to improve the speed and transparency with which payments are made. carried out. Institutions have widely recognized this fact, with virtually all major financial institutions and payment processors investing to develop blockchain and crypto-related applications. However, what has remained less important is the appeal of using crypto for consumer and business payments. The theoretical benefits and benefits of doing so have been well established, but to achieve widespread adoption, this use case will need to become clearer.
The specific cryptoassets that will take the lead in this transition and focus on payments are open to debate, but it seems reasonable to say that stablecoins will have an important role to play in the future. Investing in crypto-assets, or any other speculative asset, requires an ability to assess risk, and crypto-assets have proven to be an asset that has a higher than normal risk profile. Crypto payments, especially those using stablecoins, are a functional on-ramp that can allow even risk-averse investors to gain exposure to cryptoassets.
In other words, some of the more mundane cryptoassets on the market – stablecoins – might also be the easiest and most effective way to gain wider adoption.
Crypto-assets and blockchain technology as a whole have continued to innovate and advance at an accelerated pace, even in the face of the current crypto winter. The short-term difficulties and disruptions should not be minimized, but should be seen as an opportunity for investors, developers and regulators to focus on building more sustainable and functional apps. Price volatility is certainly in the headlines, but shouldn’t be the primary concern for market participants. The current crypto winter should be seen as an opportunity to refocus and allocate intellectual and financial capital to more sustainable and comprehensive projects. The crypto ecosystem will benefit.