With Crytpocurrencies now testing lows similar to January, at a fraction of their December highs, it is natural to ask if they were overhyped. Are they an epic fail or really the future of finance?
The recent banning of cryptocurrency advertising by Facebook and Twitter, security compromises at online exchanges, and regulation in South Korea and China have sent the value of cryptocurrencies towards rock bottom. The exuberance of December looks more like a speculative bubble than a prudent investment as market capitalization of all cryptocurrencies dropped from $800 million to just over $250 million.
The flipside is that the blockchain technology underlying cryptocurrences has not been compromised and more and more established financial institutions and governments are exploring its uses. The fundamental elimination of friction for contracts and organizational transactions such as decentralized autonomous organizations, automated contract execution, and open non-reversible ledgers ensure that the future of finance will be based on the blockchain.
Recent positive news includes:
- Coinbase (the largest US exchange) support for ERC20 tokens (basis of many ‘alt-coins’)
- Major Russian Bank Looks To Pilot Crypto Transactions In Switzerland
- Netherlands’ Central Bank Recognizes Ripple (XRP) As Excellent Real-Time Payment Infrastructure
- Coinbase, a top cryptocurrency exchange, is launching an index fund
- Despite Bitcoin’s ‘Sell-Off’ The Cryptocurrency Space Continues To Attract Investors
Information about cryptocurrencies has become more transparent and sophisticated, such as the technical trading analysis done by cointelegraph. Fundamental disruption is messy and cryptocurrencies are following a familiar terrain known as the hype cycle. Looking beyond the hype and fear to the underlying transformative technology is the best way to envision its future. — George Paap
