Why Entrepreneurs Shouldn't Panic About the Bitcoin Slump
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The spike in the price of Bitcoin at the end of 2017 caused a frenzy of excitement as people rushed to invest their money in the new phenomenon of cryptocurrency. Investments in initial coin offerings (ICOs) in 2018 surpassed 2017 by the time March rolled around and it seemed like the crypto market was moving in an upward streak. However, the price of Bitcoin has failed to reach the dizzying heights it attained back in 2017 causing many to panic or lose faith in the currency altogether.
Despite the disappointing state of the cryptocurrency market, it's important to understand that the price of Bitcoin isn't equal to the value of blockchain, any more than the use of email reflects the value of the internet. Here are all the reasons why tech entrepreneurs shouldn't worry about the ongoing bearish market for cryptocurrencies.
Blockchain and DLT technologies are attracting investment.
Corporations and institutions are continuing to look to blockchain and DLT solutions for solving their existing problems. In September, Walmart announced it would be using blockchain to manage parts of its supply chain. Maersk also launched its Tradelens blockchain earlier this year, in partnership with 93 other organizations in the shipping sector.
True, these were partnerships with IBM and not with startups. However, venture funds are still pouring money into blockchain projects, with VC investments so far this year up a whopping 280 percent over the whole of 2017. The average size of investment has also increased by $1 million. If you're a tech entrepreneur wondering how to fund your project, these numbers should provide some reassurance.
The biggest names in blockchain started small and are going strong.
Coinbase, a $1-billion company boasting over 13 million users, is the biggest cryptocurrency exchange in the world. Despite its huge success and its impressive number of both workers and users, it has only been around since 2012 when it was founded by entrepreneurs Brian Armstrong and Fred Ehrsam.
Danish entrepreneur David Sønstebø started his company a little later than that, coming into the blockchain game in 2016. Nevertheless, IOTA is now one of the best-known names in the space for its ability to facilitate transactions between internet of things (IoT) devices. It has secured partnerships with Microsoft, PwC and Deutsche Telekom among others.
Still not convinced? Jun Hasewaga and Donnie Harinsut had a background in the payments sector but only entered the blockchain scene in June 2017. Their company OmiseGO managed to secure a star advisory board including Mr. Ethereum himself, Vitalik Buterin. By August 2017, OmiseGO was the first Ethereum-based tokento hit $1 billion in market capitalization. OmiseGO provides decentralized technology for exchange and payment services and remains one of the most promising projects in the space -- because it has a real-world use case.
Which brings us to our next reason for entrepreneurs to keep calm and carry on.
Once the Bitcoin hype dies, the value of the technology can be realized.
Blockchain is still a nascent technology, and it has been going through a massive amount of hype, almost entirely driven by the price of Bitcoin. Like the dotcom bubble that came before it, there was a high, then a low and only later the world woke up to the lasting benefits of the technology.
High flyers like Larry Page, Mark Zuckerberg, and Jeff Bezos are all examples of tech entrepreneurs who had a truly original, innovative idea and kept on developing it into products and services that bring value to the world. Those in the blockchain generation of entrepreneurs will find that if they focus on solving the real problems in the world and adding value to their users, then their ideas will succeed even if cryptocurrencies don't.
The scammers are leaving, and the regulators are intervening.
There have been endless stories of "exit scam" ICOs, where project founders have simply disappeared with investor funds. Due to the stupendous amounts of money being poured into ICOs and the potential for even genuine ones to breach securities laws, regulators have started to pay more attention to the area of digital currencies.
This is excellent news for genuine tech entrepreneurs out there as tech projects still up and running now are much more likely to be the ones with good intentions, not out to make a quick buck. Fewer scam artists in the space also mean that there is more room to start building trust in the long-term possibilities of the technology.
Besides, more transparent regulatory frameworks can ensure compliance from the get-go, with less risk of being found in breach of regulations once startups are already up and running.
Related: Bitcoin: The Swindle of the Century
The blockchain job market is buoyant.
Right now the job market in crypto is exploding which is incredible for the sector. In economic terms, a buoyant job market is generally good news so even though the market for cryptocurrencies remains sluggish, a viable job market indicates that there is still plenty of economic opportunity for tech entrepreneurs in the blockchain space.
Even if bitcoin dies, blockchain will live on.
Remember Netscape? AOL? Or even MySpace? None of them exist today, and yet the internet managed to survive. Bitcoin may be the first ever use case of distributed ledger technology, but it could die tomorrow and blockchain would live on. Even if all cryptocurrencies failed tomorrow and disappeared, Walmart would still have its supply chain solution and its competitors will still likely to follow suit.
Once again, the key to success in entrepreneurship is to create innovative and sustainable solutions to existing real-world problems. The value of cryptocurrencies has no bearing on the usefulness of the technology on which they are based.
Although Bitcoin is now 10 years old, blockchain is still in its infancy in technological terms. Entrepreneurs don't need to pin all their hopes on the perceived market value of its first use case. You know the value your business can bring to its clients. If you are prepared to put the time into developing and marketing your ideas to the right investors and user base, have a solution to a real-world problem and understand the value of what you are offering, then you'll have the potential to succeed regardless of what happens to cryptocurrencies.