Nowadays, I can't browse YouTube without getting spammed with scammy ads for cryptocurrency trading platforms. I can't read an online newspaper without seeing "articles" pumping the latest ICOs, as well as centralized tokens like Ripple.
It comes with the territory, I suppose. In less than a decade cryptocurrency has gone from zero all the way to—even at current deflated values—a $350 billion market cap.
That rapid growth has meant that a hell of a lot of greedy people have been getting into the markets with little or no interest in cryptocurrency other than making a quick buck out of it. As someone who has viewed cryptocurrency as a potentially transformative technology since 2011, this is disturbing to watch, to say the least.
The biggest problem is that Bitcoin—the central coin, in which most other cryptos have been denominated throughout most of cryptocurrency history—has lost the features that made it popular in the first place. Specifically, its transaction fee costs have ballooned, and its transaction times have slowed to a crawl. This has made it harder and harder for people to get into the cryptocurrency ecosystem. If Bitcoin transaction fees are $10 per transaction—and they have been far above this at various points in the last few months—then that's more than a whole day's wages for 71% of people on our planet per transaction.
So I'm laying the blame for the crypto bust where it belongs: the Bitcoin Core developers who have promoted Bitcoin not as a new transactional ecosystem, but purely as a store of value. That's the phoney, fallacious justification they have given for refusing to raise the Bitcoin block size—a trivially easy solution—even as fees have ballooned upward. Instead of allowing Bitcoin to grow into a low cost, high speed economic infrastructure for the world, they have weighed down the coin with massive fees. Instead of incentivizing commerce, the developers have been attracting idiotic HODLers who don't use Bitcoin for transactions but instead just sit on it and wait for the price to go to the moon so they can buy a Lamborghini.
I'm sorry that a lot of people are losing the bulk of their investments, but they were suckered into an asset bubble—a crypto tulip bubble, if you will—by shysters, shills, and scammers.
Those aren't easy words for me to type, because I believe that blockchain is the future of digital content, and in the longer run probably the future of the internet, and at least a very large chunk of global commerce. But in a broken marketplace rife with lies, delusions, and shilling, what other result can we expect but liquidation? People are going to go bust. The dumb money is going to get burned.
This is a feature and not a bug. In the genesis block, Satoshi Nakamoto referred to the bailout of the UK financial industry by the UK government. The implied function of Bitcoin has always been to take away (or, at least, reduce) the government's ability to prop up broken systems with newly printed money. In other words, to let that which is broken break, and open space for the broken systems to be replaced with new economic growth.
I doubt many of the "but muh Lambo" HODLers familiarized themselves with this. Folk who want to make a quick buck—whether it's on Bitcoin, or the South Sea Bubble, or Enron, or tulip speculation—rarely read around their investments in any great detail.
But the dust will settle, and then the future will begin to look much brighter again, for those that believe in the power of the blockchain.
The key to the next cycle is two things: infrastructure, and communities. The cryptocurrency market needs new infrastructure to get around the problems with BTC. Paying a $10 entry fee is not acceptable, and will hold off mass adoption. Getting into cryptocurrency needs to be as easy as getting onto Facebook. The lightning network fix must be assumed to be an empty promise until proven otherwise. This means that new entry points must be opened into the cryptoeconomy using low-fee fast-confirmation cryptocurrencies such as BCH, ETH, and freaking DOGE for all I care.
More importantly, this infrastructure must have real economic utility. It's not enough to just mine or buy and sit on your HODLings 'til Lambo. That's a bubble mentality. BTC would never have been worth a cent without people on the dark web using it commercially. I'm an avid musician, so I'm a big fan of content coins such as Steemit, and Musicoin, because of the communities of musicians and music fans that are being built up around those projects and the potential to cut out middlemen.
There are already hundreds of projects in the pipeline. This crash may kill off some good projects, but it will also kill off a lot of scammy ones.