VC Chris Burniske Says 2018 Crypto Crash Caused By Lack Of Adoption
Venture Capital Investor Chris Burniske Explains How Crypto Crash Was Result Of Lack Of Major Digital Asset Use
The cryptocurrency industry is at a lull in their progress, which is clear from the recent drops in prices for the majority of tokens, but it has not been this way until recently. The year of 2017 was a 12-month shocker as tokens like Bitcoin, Ripple, Ethereum, and Bitcoin Cash thrived. Their profit ranged from 1,000% to 30,000% in gains, making it look like this industry could not be brought down. Unfortunately, the fate of these coins in 2018 has proven to be their downfall so far, bringing down an industry from a $900 billion value to $195 billion, which is a 78% loss.
Much like companies on the stock market, the value of a cryptocurrency is only as good as what it offers to consumers. As the demand rises and more purchases are made, the price gets higher and the token becomes more valuable. They are given that value, based on how they can be traded for various assets and other currencies. Unfortunately, they have not proven their worth this year in the same way that they could last year.
Chris Burniske, who is a partner at Placeholder VC, believes that this path is not the one that cryptocurrency should have gone down. The medium of exchange and the fact that crypto could be a valid payment method should have, theoretically, made them more valuable. Instead, the lack of adoption into the various areas of e-commerce ensured that it left a negative impact on the market as a whole. Burniske took to Twitter to voice his opinions, writing,
“Why is crypto falling so much in 2018? Because in 2017 the market was up > 30x, but adoption (beyond investing & trading) wasn’t concurrently up 30x. One can try to explain each fluctuation, but these explanations are frequently stories we tell ourselves, stretching to add reason to traders driving a bear market.”
The whole point of these digital currencies is to be used for its role as a payment method and their inclusion into a decentralized network. Dogecoin founder and Adobe product lead Jackson Palmer concluded that, based on these intentions, the best way to measure the success of the industry and daily volume of it is through adoption.
Every platform is suffering right now, and they have been suffering for the last eight months. Without using tokens like Ripple, Bitcoin and Ethereum as alternative methods of payment, it seems that the only way to find a solution is to examine the differences in adoption for 2017 and 2018. Chris Burniske brings up an important point in a subsequent post, saying,
“How far we will fall depends on how much adoption grew in 2017 — 3x? 5x? 10x? Right now the market’s sitting at ~10x above January 2017 prices (more/less in some cases), but has adoption grown 10x since then? 2017 is not the first time, nor is it the last time this will happen to crypto. We have entered the frenzy, where financial reality will often hyperventilate, as the underlying fundamentals march onwards mostly unperturbed.”
So, the entire industry has to ask – what now? Major retail companies, like Microsoft and Starbucks, are doing their part to make cryptocurrency more usable in their industries. Pundi X has developed and distributed tens of thousands of point-of-sale devices that are capable of accepting cryptocurrency as payment for any participating location with a credit card machine.
Hopefully, by making opportunities to spend cryptocurrency more mainstream, it will be easier to bring in new investors in the industry. For now, it is time to take a “wait and see” approach.