Crypto has more in common with the Dotcom Bubble crash of 2000 than with the financial crisis of 2008.
According to the Bank of America, the plunge in speculative tech stocks and crypto since the beginning of the year now equals the previous market crashes like the dot-com crash and the 2008 financial crisis.
Businesses and stock values bolstered by a decade of cheap money and boosted by government stimulus have swiftly unravelled as interest rates increase, revealing initiatives based on little more than hyperbole and exaggeration.
Only when the tide runs out, as Warren Buffet famously stated, do you find out who’s been swimming naked.
The most prominent losses have been in crypto, where several currencies have completely collapsed. For years, regulators and financial gurus have warned that this may happen.
It’s tempting to dismiss the industry, but you shouldn’t. Crypto was born in the midst of the financial crisis and has seen several collapses. It has roared back every time.
Yes, there was a lot of garbage in the industry – scammers, money-laundering, Ponzi schemes, wild parties, get-rich-quick schemes – but the fundamental technology is still fascinating and potentially disruptive to the whole traditional, financial, banking system.
Developers working on blockchain, and crypto technologies will undoubtedly keep pressing forward, just as 2000 swept away many of the low-quality initiatives and prepared the way for Amazon, Google, and the other winners. In fact, many committed developers welcome the correction since it eliminates the rogues who tarnished their work.
Crypto will flourish when it becomes invisible, already an integral part of the system, underlying and enabling technology that we use every day, just like the internet has become part of our daily lives.
El Salvador President Nayib Bukele appears far from being spooked by the latest price crash, instead, announcing that he will be hosting 44 countries to discuss the benefits of bitcoin.
Representatives of Africa’s two biggest economies – Egypt and Nigeria – will be among those attending, with one of the main topics for discussion being that of financial inclusion and banking for the unbanked.
It may be just around the corner, it may take another 5-10 years, or perhaps longer. It’s possible that it’ll never happen (not). The current crash, however, will not stop those striving to make it a reality. Ignore them at your peril!
online sources: msn.com, uk.finance.yahoo.com All opinions and views expressed or suggested by the Digital Zeitgeist are not necessarily the same opinions and views held by or suggested by GPM-Invest plus any and all partners, affiliates, parties, or third parties of GPM-Invest. Any type of media distributed by GPM-Invest IS NOT financial advice. Please seek advice from a professional financial advisor.