Ariel Shapira, serial entrepreneur from Israel, writes monthly about crypto tech. He discusses emerging technologies in the crypto, Decentralized Finance (DeFi), and blockchain space as well as their role in shaping the economy for the 21st Century.
Industry leaders, from Polygon cofounder Mihailo Bijelic to Mark Cuban, agreed that bear markets were a healthy way to cleanse the market. Warren Buffet, a long-time crypto critic, even used the phrase to describe his view of the matter.
“Only when the tide goes out can you find out who has been swimming naked.”
No one in the industry would dispute that bear markets are used to weed out weak people or the nakedly corrupt. We would be wrong to ignore the details and assume that crypto markets will wipe out more than $700billion in a matter of hours. It is important to understand what caused the market’s collapse and how to make it more stable in the future.
NFTs: A blessing or a curse?
Five years have passed since the 2017 ICO boom, which led to the first major crypto crash. This was a relatively young industry, so most of the projects that sprung up during this time and drove investment were just random coins touting to be the next Bitcoin. Since then, the industry has grown a lot and other uses of blockchain have driven the hype.
What was the latest bull run’s version scammy ICOs, you ask? There were many factors that contributed to Bitcoin’s recent market boom, which saw it reach almost $70,000 per coin. The most similar to the ICOs of the past were the nonfungible tokens, which reached a staggering $25 billion in 2021. Perhaps the industry reached its peak when NFTs from Bored Ape Yacht Club’s (BAYC), collection sold for hundreds of thousands, and then millions of dollars in Ether. In addition to celebrities, industry icons like Adidas, Coachella, and the Super Bowl got involved.
Related: Beyond the hype: NFTs could transform business experiences
It all turned sour when it was discovered that more than 80% were frauds or scams. At the NFT.NYC in June, cash-grab culture was on full display.
However, many crypto experts agree that NFTs will change the way people own their property and play an important role in Web3. How can we get to that future without riding on the innovation coattails?
It is actually very simple. The best way to move forward with NFTs and their technology is to tie them together to valuable physical assets and use their ability to authenticate products and secure them.
NFTs have been explored by luxury goods companies to counter the spread of counterfeit products. Projects like the Aura Blockchain Consortium, which is headed by luxury brands LVMH Group and Prada Group, use NFT technology to authenticate products, increase transparency in supply chains, and give data ownership for physical products.
It’s not about selling digital sneakers, but rather enhancing the brand and product experience for their wealthy clients. For example, Yvel, a jewelry company, has launched a securities trading platform that is tied to precious metals and fine jewelry as guarantees. The NFTs are actually converted to tangible products rather than JPEGS.
Blockchain is a better option
Not only is it important for NFTs to survive the bear market, but also for foundational crypto assets — which have, by the way. not completely corrected their tendency towards scams. Although the collapse of algorithmic stabilitycoins will likely cause some aversion among casual holders and companies, it does not mean that all hope is lost. This is where the path to success lies. It’s important to focus on creating a product that addresses a real market need, similar to what was done for the NFT market collapse.
Related: What can other algorithmic stabilitycoins learn about Terra’s crash?
This is a common take that we have all heard. How can we get there? All it comes down to basic business principles. Startups must find a solution to a problem in order to thrive. This problem cannot be simply that founder isn’t wealthy enough. What are the most promising sectors for meaningful coins?
For crypto and blockchain projects, minimizing environmental impact and operating sustainably have been the white whales. One of the most common criticisms of crypto and blockchain is the fact that they can cause significant harm to the environment from the emissions from token mining and other crypto-related byproducts. This stigma is still a problem for most projects, but there are new developments that could change this.
Sustainability has become a key value that modern companies must embody in the business world. Although many corporate commitments only offer a vague promise of reducing carbon emissions in a given year, crypto can borrow more concrete steps. Corporate carbon credits have been a useful tool for companies to offset their environmental footprint and reduce their carbon emissions.
Related: Green finance requires voluntary carbon markets that work
Although there have been many blockchains that are leading the way in eco-friendly operations such as Cardano or Algorand’s, crypto holders can still participate in the carbon market. This is another way to promote sustainable development. Investors can gain tangible value by investing in carbon credit futures through projects that offer crypto-specific carbon credits. Other efforts are underway to make Ethereum, the second largest blockchain market capitalization, more eco-friendly.
The rambunctious nature of the crypto and blockchain industry is what has made it so unique. Although any new industry will be affected by volatility, downturns, and roadblocks, this bear market should be a wake-up call to all projects. It is all about solving a problem and using your product to solve it.
This article is not intended to provide investment advice. Every trade and investment involves risk. Readers should do their research before making any decision.
These views, thoughts, and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.
Ariel Shapira, father, entrepreneur and speaker, is the founder and CEO at Social-Wisdom. This consulting agency assists Israeli startups in establishing connections with international markets.
Eileen Wilson –Technology and Energy
My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.