Freefall of Cryptocurrencies induced by Operators
Recently UST crashed, causing ripples across the crypto market. The destruction of the value of this stable coin which is supposed to be backed by algorithms and other crypto-currencies has created fears about the crypto market as a whole. What does this debacle explain about the future of crypto?
The cryptocurrency in itself is a virtual thing that has no legal backing. Legal systems in themselves are based on the idea of government and laws. These legal systems have created space for those middlemen who have made this whole financial and creative industry expensive and restrictive. Cryptocurrencies have emerged to circumvent these restrictions. All the entities who have been taking part in these cryptos already understand this.
But this lack of legal backing does not mean that crypto assets are in itself bad. Actually, the technology is based on very fundamental mathematical concepts which are not dependent upon the whims of any individual. But any technology can be as good as the application that is using the technology.
All the entities who are investing in blockchains need to understand the projects and then invest in them. The very basic parameter to check is: if the project is actually adding some value or if it only wants to stamp crypto to raise funding. In the recent blockchain hype, multiple companies have started their projects only because the investment environment was conducive to that. Eventually, these companies or individuals start behaving like operators by creating investment groups. These so-called operators have created this recent free-fall.
I would say that it is a lesser a free fall but more of a price correction. The crypto market is huge and it is nowhere near any quick death as predicted by many. But the recent debacle has definitely created a blemish on the crypto industry. My suggestion to all the stakeholders is: Always identify the projects which are actually adding value, which is based on fundamental logical-mathematical concepts, and not put all the eggs in the same basket.