Expert Insight

Wall Street Journal crypto hit job a sign of the times

We start 2019 as we ended 2018, with the mainstream media running down Bitcoin and blockchain technology

“At the beginning of 2018, the question was whether Bitcoin could live up to the hype of 2017’s manic rally. At the end of 2018, the answer seems to be an emphatic “no.”

After rising nearly 1,400% in 2017, Bitcoin reversed hard in 2018, falling about 70% and erasing some $160 billion worth of value. The selloff exposed the budding cryptocurrency market’s shaky footing. Despite the entry of some established Wall Street players, scammers abound and few tangible uses for Bitcoin and its underlying blockchain technology have emerged.”

So begins a tiresome article by The Wall Street Journal, building on research published in December, claiming that hundreds of crypto offerings show signs of fraudulent activity, improbable returns, and plagiarism.

It’s an argument in line with the musings of Jed McCaleb, Stellar’s Co-Founder who recently told Yahoo! Finance: “90% of these (crypto) projects are B.S. I’m looking forward to that changing. Things like Tron, it’s just garbage. But people dump tons of money into it, these things that just do not technically work.”

He, of course, has skin in the game (Stellar rules! etc etc), but, surprise, surprise, the haters seized upon his comments as further proof that this is a space overrun by charlatans and heading for oblivion.

“There is tremendous noise around crypto and blockchain right now and you have to shout out loud to cut through it”

Better, I believe, to go with the POV put forward by Kelly Loeffler, CEO, Bakkt. Failures will always happen with a new technology that allows anyone to get involved.

“It’s worth noting that major technology shifts prior to 2000, such as the advent of cell phones in 1980s and commercialising the internet in the 1990s, didn’t develop with the scrutiny of real-time digital headlines and tweets,” she says.

“While access to information as technology innovation occurs is extremely valuable, the risk is a “marking to market” of innovations before they have a chance to mature. Few innovations reached their full potential in their first decade of development.”

2018 was the most active year for crypto in its brief ten-year history, Loeffler points out. This was evidenced by rising investment in distributed ledger technology and digital assets, as well as by blockchain network metrics such as daily Bitcoin transaction value and active addresses. Yet these milestones tend to be overshadowed by a focus on Bitcoin’s price, seen by some as a proxy for the potential of the technology.

As increased regulation enters the market, accompanied by increased adoption, we will see volatility reduce and stability increase, further establishing cryptocurrencies as an asset class in their own right.

Meanwhile, blockchain technology will start to become mundane in 2019, according to MIT Technology Review. Whilst Alibaba Group’s DAMO Academy expects the emergence of more applications, ranging from cross-border remittances, supply chain financing, electronic invoices to tamper-proof judicial records.

“It’s worth noting that major technology shifts prior to 2000, such as the advent of cell phones in 1980’s and commercialising the internet in the 1990s, didn’t develop with the scrutiny of real-time digital headlines and tweets”

But that won’t stop the likes of the WSJ churning out further hit job articles. I should stress that there are some in the mainstream media covering this area in a measured, insightful way. But there is also tremendous noise around crypto and blockchain right now and you have to shout out loud to cut through it.

Which brings me to a comment made by the never boring Nick Ayton: “We have witnessed a systematic approach supported by broadcasters who are close friends of the banks ,  CNN, CNBC, and the new crypto press Coindesk and Cointelegraph, that sold out for profit rather than defend the crypto economy on which they were founded, to spread good news and encourage adoption, decided to propagate the fear on behalf of Satan, as greed once again took over from libertarian motives.”

Vested interests, selling out for profit, spreading fear…Age old problems, I guess. Here’s to another fascinating year!

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