For quite some time, cryptocurrencies have been accused of being a Ponzi scheme. Outside the crypto space, many conservative politicians have been comparing Bitcoin and other cryptocurrencies to MLMs or illegal Ponzi monopoly money. Even inside the crypto space, crypto figures always criticize each other, and this kind of tribalism mindset has been very bad for the image of crypto to casuals out there.
But, despite relentless criticism from both inside and outside crypto space, the underlying technology and philosophy behind cryptocurrencies remain solid. Even the latest craze, regarding DeFi, it actually has a solid philosophy and use case behind it. Even if you believe the current trend in crypto is fueled by extreme greed and speculation, it is important to see that they have set the correct underlying protocol for the future. And this is exactly why cryptocurrencies are the future despite their price volatility.
The Speculation Part And The Technology Part
So, why do people feel skeptical about cryptocurrencies? Well, because they can’t really separate the technology part and the speculation part. Many people feel that cryptocurrencies are useless because they can go up or down 30% in one day. And this is why many conservative politicians or economists don’t trust it simply because crypto prices can easily go up or down.
The thing is that they often do not understand the technology. They might understand the price speculation part, but they are completely ignorant about the technology. And this is why it’s hard for them to be convinced because people who are ignorant about technology will be left behind in the future.
First and foremost, it’s important to acknowledge that cryptocurrencies became big because of the idea of decentralization. Having a trustless ecosystem where you only need to trust the codes and not any middle-man is very appealing. In fact, this idea has been adopted by many corporations who might not believe in speculation but still want to adopt the idea of blockchain (hence why they are creating private blockchains among themselves).
So, yes, it’s not hard to see how the blockchain technology is setting the future of trustless digital transactions. You can believe that BTC or ETH price is too high but still believe in the future of cryptocurrencies due to the decentralized philosophy. And of course, who does it better than them when it comes to decentralization? Think about it this way. Stablecoins or CBDCs (Central Bank Digital Currencies) still have their value attached to fiat and centralized entities issuing them. But when it comes to public cryptocurrencies like Bitcoin, the value is purely decided by the market’s supply and demand.
DeFi Bubble And Setting Up The Future
In 2020, everything has been about DeFi. After Andre Cronje (creator of YFI) released a 100% governance token for his yearn platform, everything just took off without many corrections. DeFi has officially created a huge crazy bubble. Even Ethereum creator, Vitalik Buterin, has firmly criticized the crazy pump of yield farming tokens.
However, despite the fact that these yield farming tokens have unsustainable growth, it’s important to see that the future is actually set up by the current DeFi bubble. Yes, the DeFi bubble will eventually pop but they are creating an important conversation in the blockchain industry. How important is a governance token and how important is a DAO in a decentralized environment of trading, lending, and borrowing? All these conversations were overlooked before the current DeFi bubble but now everybody talks about it.
At the end of the day, cryptocurrency prices might go up and go down. Crypto might enter another bear market after this year’s bull market. You never know. The thing is that the technology behind the price speculation is exactly what the future needs. Be it about DeFi, be it about smart contracts, or just simple token transfer through the decentralized public ledger, they are all very important to challenge the current status quo where centralized entities (i.e., banks) decide everything.