The most recent bear market should serve as a wake-up call for projects: it’s all about finding a problem and then using your product to solve it.
The post-mortem view among industry leaders ranging from Polygon co-founder Mihailo Bjelic to billionaire crypto investor Mark Cuban is that bear markets are a beneficial mechanism for cleansing the market. The latter even used a phrase similar to one employed by long-time crypto critic Warren Buffett in expressing his point of view: “Only when the tide goes out do you realize who has been swimming naked.”
Bear markets eliminate the weak and, in this case, the blatantly dishonest. But we’d be incorrect to stop there because $700 billion worth of crypto wealth evaporated in a single night is something we should continue to accept. It’s important to understand the key factors that led up to the previous bull run’s spectacular failure as well as how to establish a more durable market climate in order for us all to move forward from here.
Are NFTs a blessing or a bygone era? We’re five years removed from the first big cryptocurrency crash, which was exacerbated by the notorious initial coin offering (ICO) craze of 2017. The majority of the projects that emerged during this period and attracted investment were random cryptocurrencies claiming to be the next Bitcoin (BTC).
What were the most recent bull runs’ equivalent of fraudulent ICOs? Several elements helped to push Bitcoin to a value of almost $70,000 per coin in 2018. However, NFTs, a market that reached about $25 billion in 2021 and is similar at its core — yet often more ridiculous — than past ICOs.
When the Bored Ape Yacht Club’s NFTs were selling for hundreds of thousands — and eventually millions — of dollars in Ether, the hype level was undoubtedly at its peak (BAYC). Celebrities entered the fray, as well as industry giants such as Adidas, Coachella, and even the Super Bowl.
Then everything went sour when it was discovered that more than 80% of the NFTs produced for free on OpenSea were either frauds or scams. The cash-grab mentality was on full display at the NFT.NYC event in late June. That being said, many in crypto do not deny that the technology behind NFTs will redefine ownership and play a significant role in Web3.
It’s actually rather simple. NFTs and the underlying technology could be linked to desirable physical assets and used to authenticate and safeguard items, according to some experts.
NFTs might also be used to bring transparency to otherwise opaque industries, such as the luxury goods sector. Luxury businesses including LVMH and Prada Group have established the Aura Blockchain Consortium, which utilizes NFT technology for product authentication, supply chain transparency, and data ownership for physical items.
It’s not just about selling a digital sneaker; it’s all about enhancing the product and brand experience for their high-end consumers. For example, Yvel created a securities and trading platform linked to fine jewelry and precious metals as guarantees – rather than JPEGS – to enhance the product experience for its affluent clientele.
Not simply is surviving the bear market required for NFTs, but it’s also important for more fundamental crypto assets — which, by the way, haven’t totally recovered from their propensity to commit fraud.
Algorithmic stablecoins are likely to result in a substantial lack of interest from casual customers and enterprises in meaningfully experimenting with how to link cryptoassets with real assets, but that does not imply all hope is lost. The way forward here, unlike the resolution to the NFT market collapse, truly lies in focusing on developing a product that satisfies an actual, tangible market need rather than focusing on superfluous technical aspects.
That’s something we’ve all heard before. So, how will we get there meaningfully this time? It all stems back to the fundamentals of entrepreneurship. Startups must first identify a problem that they are attempting to solve, and that issue cannot simply be that the founder isn’t rich enough. So, what industries might meaningful cryptocurrencies target?
Minimizing environmental impact and operating sustainably has long been a white whale for cryptocurrency and blockchain projects. The emissions produced by token mining and other crypto by-products have been a common complaint about cryptocurrencies and the blockchain in general. A majority of projects have failed to shake off this reputation thus far, but new solutions may help promote a significant shift in thinking.
At the corporate level, sustainability has rapidly grown to be a standard value for a contemporary corporation to embrace. While many of these corporate pledges are superficial or imply vague promises to reduce carbon emissions by a certain date, crypto can benefit from more specific actions. The adoption of corporate carbon credits, while imperfect, is one such development that crypto can adopt from.
While there have been numerous blockchains dedicated to environmental friendliness, such as Cardano and Algorand, enabling crypto investors the option to contribute to the carbon market is another approach to push for ecologically responsible development. Projects that provide businesses or individuals with crypto-specific carbon credits or tokens linked to external carbon credits, such as CC Token, which opens access to investing in carbon credit futures for organizations and individuals, give investors actual value.
It’s all about identifying an issue that needs to be addressed, then putting your product to good use.
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