Economist: It’s Time for Bitcoin to ‘Put up or Shut up’

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This year has been filled with negatives for cryptocurrencies, or at least cryptocurrency investors. Trading at insane prices towards the tail end of 2017, crypto values have fallen closer to earth, with a large majority shedding as much as 80 percent of their value. This has led to quite a bit crisis talk, with some commentators prophesying an imminent crypto crash. Economist Tyler Cowen, though, isn’t sounding the alarm — yet.

In an op-ed published in Bloomberg, Cowen, a professor at George Mason University, wrote that a crypto price crash could be beneficial to the market, as it could set the market up for something big in the future. He made references to the 19th-century bubble which saw the collapse of railroad stocks and the dotcom crash of 2000. In all these events, Cowen argued, there were some negatives with plenty of positives.

“Internet stocks plunged in the dot-com crash of 2000-2002, but that in turn cleaned out the bad companies and paved the way for the subsequent tech revolution, including the rise of Amazon and Google,” Cowen explained.

As the world has come to realize, where cryptocurrencies are concerned, past events cannot determine future circumstances, but one idea Cowen holds dear is that a price collapse does not necessarily mean the “end of a technology or its relevance.”

For Cowen, cryptocurrencies saw a growth rate in value to almost $800 billion from zero, which made the market attractive to investors of all types. The ease of entry into the market also didn’t help matters, as an influx of “junky ideas were tossed around and then often funded by ICOs (initial coin offerings),” the economics professor noted.

While cryptocurrencies have a lot of use cases, including trans border payments and the creation of dApps, some neutrals still see it for its drawbacks — of which money laundering and drug trade stand at the top. Cowen, however, believes the slump in prices has led to more discussions on how to make cryptocurrencies more relevant while protecting investor funds.

Stating some of the solutions cryptocurrencies have created due to these meaningful discussions, Cowen explained:

“We’re at the point where crypto finally has to prove its social worth. But what might that mean? Imagine using crypto as a medium of micropayments to pay for media on the internet. Or perhaps you’ll use the blockchain to verify your identity, rather than telling some stranger on the phone the last four digits of your Social Security number.”

However, Cowen concluded his op-ed by stating that bitcoin may be facing its “do or die moment.” It’s time, he wrote, for bitcoin to “put up or shut up.”

“Think of bitcoin and other crypto-assets as like a company that is finally receiving a cash call. I am modestly optimistic, but it is time to put up or shut up. Let us hope that this ‘do or die’ moment will once again bring out the best in entrepreneurs,” he said.

Featured Image from OECD/Flickr

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