Why The Crypto Crash is Good for Crypto
Crashing. Collapsing. Dissolving. Stable becomes unstable. NFTs are burning faster than oil paintings in a bonfire. The end is nigh. Except it isn’t. For some though, it is. And that’s a good thing. Crypto market analysts are interestingly, doing all kinds of comparisons to market collapses and currency shifts in the real world financial sector. Crypto, in its early heady days, said the pundits, would not be subject to such vagaries. Until it was. Now, a very exciting time may be in front of this industry.
I’m not a financial markets expert, not by any stretch. I apply my cultural anthropology lens to the digital world, to technology and how humans use it. And culture is the primary means by which human society, adapts and evolves. Our world is driven by sociocultural systems. Finance is simply a means of reciprocity. Crypto is the same. So if we cut out the complex, though necessary, financial minutiae, this is could actually be a very good time indeed for the crypto industry.
Bitcoin is considered the first true cryptocurrency, although there were earlier attempts. Since its launch in 2009, the world has been flooded with various currencies, related apps, the concept of the DAO, blockchain apps and a huge swath of ideas and the controversial Web3.
The crypto world has also been deluged with ponzi schemes, massive thefts, a parade of scams and frauds, including the world famous Gerry Cotten Quadriga fraud. There have been attempts to self-regulate the industry, but there’s no formal set of standards like IEEE or ISO that have been agreed upon at scale. Government regulations are a hodge podge of licensing, some have central bank projects others don’t. The map below from Comply Advantage is a nice overview.
So why, amidst all this lost wealth and collapse, might this actually be a good time for crypto? The more immediate outcome is that those cryptos that survive, will likely become less volatile. Such stability could help legitimate crypto firms become more attractive to the majority of people who don’t have a clue what it is.
And there’s a key issue. The majority of people in the world have no idea what crypto is and most of what they do see in the media is not good. As the old news media adage goes “if it bleeds, it leads” and crypto has been no exception. Traditional financial advisors tend to steer consumers away. Crypto has a huge image problem.
Crypto is often conflated with blockchain as well. Few understand the difference, even fewer care. In some of my netnographic research projects, the results often show that most consumers just don’t understand it. Crypto has been in the early stages of technology adoption, largely the realm of the curious and those who like to be far ahead of the curve. A visionary market is rarely, if ever, profitable.
If crypto companies and markets want to get to where the real, long term wealth is, it needs to get beyond the visionary markets and the dark corners of the web into the light. Crypto might also do well to tone down the myth of decentralization. It has demonstrably shown itself not to be.
Crypto can add real value to human societies. It can be a means to lift people out of poverty. It can help people gain value from contribution through Social Tokens — a brilliant concept. It could, done properly, fight financial fraud and impact global illicit trade, which accounts now for around 3% of global GDP.
For over a decade, cryptos social contract with the world has been shaky. That’s alright. It’s new and largely unknown. It’s an exploratory, early days technology. Societies take a while to decide how they’ll adopt and adapt, to new technologies.
This moment in time is a wake up call to the world of crypto. The industry has an opportunity right now. But it must figure out how to clean up its image, how to coordinate, better define what decentralization actually means and where it doesn’t apply. Crypto must also find a way to work with governments. Like every single other industry in history, it cannot self-regulate. Some degree of government regulation is inevitable.
The crypto industry is going through what all emerging industries go through. Various forms of currencies, of reciprocity systems have come and gone through human history for many thousands of years. Crypto enthusiasts may think they’ve invented something new. They have not. Native Americans had similar systems using artefacts such as sea shells, hundreds of years ago. Crypto may be a new technology, the reciprocity systems and ideas, are not.
Arguably, what’s ahead for the crypto industry may be more exciting and beneficial than its opening decade. I hope so. There is so much societal value crypto can deliver.
