“The crypto winter is upon us.” I love that term because it is so descriptive. It evokes imagery that conveys a clear state of the world, much like what you would see in an episode of “Game of Thrones." As a digital industry veteran, I’ve seen this movie more than a few times, and I know we’ll see it again. The internet has experienced its own “winter” on multiple occasions -- and when spring arrives, things always end up stronger than they were before.
Think back. When the dot-com bubble officially burst in the late 1990s into 2000, people were calling it a death knell for digital media, but they were wrong. That bubble burst -- and a slew of highly inflated companies riding the wave without real revenue or true differentiation became casualties. If you had a real benefit and traction, you survived and thrived as a result of decreased competition and more focus from consumers. The signal rose and separated from the noise, laying the foundation for much success in years to come.
All in all, that bubble bursting was the best possible thing to happen to the internet. The same thing is about to happen for crypto.
Crypto is wildly inflated. There are too many people simply trading with each other and taking advantage of freebies and fees for a small, very focused universe. There are not masses of new people coming into the space (at least not at the rate the press would have had you believe six months ago). I went to a crypto conference recently and it felt like walking around at Comic-Con. It was filled with young, passionate, excitable people with a lot to say, looking to connect with people who said the same things. There was little naysaying and lots of fan-boy and fan-girl speculation.
This is the kind of stage where a bust is necessary. You need things to come back down to life. That creates a correction of sorts, where the real companies with real revenue and true differentiation can weather the storm by establishing clear customer engagement and loyalty. This kind of drop, winter, or bust is what fuels ongoing strength in a market. It happens in real estate. It happens in tech, and it will happen in crypto.
So, what comes next?
Inevitably we will see growth. We will see clearer messaging about benefits, and easier UIs developed to enable cleaner access to investment in crypto. We will see more people come into the market, bringing more investment, more solid ideas and more opportunity, but we will see that opportunity build on the foundations of real revenue rather than speculation.
Some of the strong names that weather this storm will establish a stronger foothold. We will also see some collapses along the way. Some stadium names will be changed as a few companies merge or go out of business. We will see customer support infrastructure created to service angry customers unable to get out before the collapse, and that infrastructure will help the growth of new users in the years to come.
The question now is: When will this all take place?
Your guess is as good or better than mine. If I were betting, I would say a year from now, this winter will be history and things will be on an upward trajectory again. I may be wrong though. Every time I invest in crypto, it drops, so who am I to say?