Finding the Path That Leads to Crypto Maturity

We are 13 years into the great cryptocurrency experiment. And for many it is a mysterious concoction of funny money and speculative assets and a playground for fraudsters. In fact, crypto is at a critical turning point in its path to maturity.

The way forward requires closing the huge gap between the blockchain’s promise to improve people’s lives and today’s reality, which falls far short. This gap represents one of the biggest innovation opportunities of the coming years for builders – and for the investors who back them.

Bankruptcies, forced liquidations, illegal activities and investor losses dominate the headlines. Much like the dotcom bubble in the 2000s, the state of crypto today says less about the technology itself than the speculation surrounding it.

To be sure, too many people have spent too much money to buy too many new cryptocurrencies that should never have existed. This created a huge artificial demand that propelled even the most speculative cryptocurrencies.

As the saying goes, it’s all fun and play – until someone trips over the corpse.

The corpse here was a lever. Too many of the purchases were made by speculators who had never experienced a bear market with other people’s money – money that had no chance of being paid back. Buyers disappeared. Lenders went into survival mode. Their margin calls went to voicemail and borrowers were forced to sell speculative assets in a market with no buyers.

Nothing about the major crypto crash of 2022 that wiped out $2 trillion in “value” should come as a surprise, as we’ve seen this before. “Call it the $1.755 trillion dot.com investment lesson,” David Kleinbard reported in CNNMoney when 2000 came to an end. “It’s hard to imagine a publicly traded Internet company that hasn’t fallen at least 75 percent from its 52-week high and hasn’t cut costs or laid off employees.”

Sounds familiar?

A reason to be

“The carnage in the crypto market will not end as token prices plummet, businesses lay off employees in waves, and some of the most popular names in the industry are going up,” CNBC reported last month. “The chaos has terrified investors and erased more than $2 trillion in value in a matter of months.”

To attract the interest in crypto that we saw after the bursting of the dotcom bubble, we need to jump off the ferris wheel of speculation and focus on the path of an industry. Like people who feel most fulfilled when they find a purpose, the crypto industry needs to find its raison d’être, just like any other technology before it.

Crypto and Web3 represent the latest advancement in a decades-long advance of technology. We needed the computer chip and mainframe to get to desktop computers, then the laptop and smartphone. The Internet had to exist before AOL made it easy and accessible to the masses. Without all of the above, there would be no blockchain, cryptocurrencies, and NFTs. World-changing moments in technology are an evolution – and we are on the cusp of crypto changing everything.

Nevertheless, to change anything, our goal should not be to make quick money off the backs of leveraged consumers and fund managers. It must be based on usability and that utility must be unlocked by the technology itself and not possible without the technology.

We’ve seen this moment before. To ignite the Internet, we needed an easy interface (thanks, AOL) and useful services (thanks, Amazon, USATODAY.com, and other early Internet pioneers). We had everything we needed for businesses to use computers, but we didn’t have a computer in every office (thank you, IBM, Apple, and HP) and programs to make them useful (thank you, Microsoft and Adobe). And now we are at a similar critical juncture for crypto and blockchain. We need the AOL, Amazon, IBM, HP, Apple, Adobe and Microsoft of this new technology.

The most exciting thing for me is that many of these companies are just starting out during this crypto crash.

Mike Lazerow is the CEO and co-founder of Velvet Sea Ventures.