Why you should embrace crypto winter

By Ian Silvera

As summer shines on outside, a cold is quickly enveloping the offices, online chat rooms and social media hideaways of the cryptocurrency industry. After the pandemic period saw investors stuck at home with nothing much to do and Covid payouts to play with, the industry thrived in 2021, hitting new token price highs and popularising digital art through non-fungebable tokens. In classic boom fashion, everybody was a winner – until they weren’t.

Before May things started to look shaky. Inflation was taking hold and the cost of living was rising. Investors had to tighten their belts, while central banks tightened the money supply.

The cryptocurrency industry suffered, despite the long-held claims that major projects like Bitcoin, once lauded as ‘digital gold’, are a hedge against inflation. It was in that dim backdrop the latest cryptocurrency happened.

The Terra crash, when the so-called stablecoin became de-pegged from the price of the US dollar, was arguably the point when the real crash began. Other stablecoins were put under pressure, while the whole idea of an algorithmic stablecoin, where mathematical wizardry is used to keep its peg with a leading fiat currency, was put into question.

The loss of confidence didn’t just hit average Joe retailer investors, but the core of the industry, who often use stablecoins to pay for goods and services, was rocked. Bitcoin had gone from a high of more $66,000 in November to around $21,000 in June. Now the real-world consequences are becoming clear as cryptocurrency companies either stop hiring or cut substantial parts of their existing workforces. The crypto winter is biting hard.

It needn’t be all bad news though. The industry has nearly always faced accusations of being fuelled by speculation and empty promises. Now is the time for the blockchain believers to get their heads down, improve their products and show what the technology can achieve. Some particular areas of interest where the cryptocurrency has promise is around micropayments, helping the global bankless create current accounts and the creation of digital IDs so people can access government and other services.

This is a long way away from people having a punt on an obscure NFT project, with the hopes of getting rich overnight. Now is the time for the cryptocurrency industry to show its real value.