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Don’t Fall For The Hype in Cryptocurrenciesby@Kogan
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6,535 reads

Don’t Fall For The Hype in Cryptocurrencies

by Constantin KoganApril 18th, 2022
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Mapping out a decentralized financial utopia beyond the hype of meme coins, billionaires, speculation, and clickbait. The world is abuzzed with thoughts, curiosities, and judgments about the industry, both in theory and in practice. A future that aims to dismantle traditional systems, revolutionize the way we all think about money, and usher in a new era of digital existence. The current cryptocurrency industry, as it stands today, is met with a lot of interest and criticism, yet lacks real comprehension.

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Mapping out a decentralized financial utopia beyond the hype of meme coins, billionaires, speculation, and clickbait.

It’s impossible to avoid - even if you tried - the words cryptocurrency, NFT, and the metaverse. It's as if these futuristic concepts are knocking – no, banging – on our front doors. The world is abuzz with thoughts, curiosities, and judgments about the industry, both in theory and in practice; turning once-fringe ideas into cultural talking points, the punchline of a million jokes, and the booze-fueled party conversation that everyone hates to love.


While crypto conversations have hit the mainstream with infamous popularity, the evolving technologies and foundational projects that are the bedrock of the industry have been solidly committed to building a next-generation future for years.


Bitcoin (BTC) Price-Per-Day - USD

Source: statista.com

Consider Bitcoin (BTC) (while now a household name), which was founded in 2009 by a programmer under the pseudonym Satoshi Nakamoto, and in many investor circles, is thought of as the original cryptocurrency. A coin that ushered in a new age of blockchain technology and decentralized digital currencies.


Since its inception, 13 years of innovation and emerging technologies have transpired, making this “future” of crypto, more realistically a dynamically evolving “present”. A present fervently moving towards a future that aims to dismantle traditional systems, revolutionize the way we all think about money, and usher in a new era of digital existence.


The current cryptocurrency industry, as it stands today, is met with a lot of interest and a lot of criticism, yet lacks real comprehension.


A 2021 report by cryptoliteracy.org suggests that 96% of Americans fail to comprehend basic crypto knowledge. This creates barriers around the type of growth and success hopeful investors are able to achieve–in short, for the majority of people it’s not about the strength of the investment, it’s about the hype.


Source: Image via cryptoliteracy.org 2021 report


Meme coins, speculative investors, billionaires, and clickbait articles have generated a pop culture of cryptocurrency interest that has conflated investing with gambling and a promising future with get-rich-quick mentalities.


How can the growing community of crypto enthusiasts look past the hype and educate themselves on the highly sophisticated intricacies of a revolutionizing industry? If current trends stay focused on the distraction of the newest meme coin, will that continue to perpetuate the idea that crypto is about as stable of a future as a novelty slot machine?

2021 Markets In Review

Whether people love it, hate it, or don’t understand it, cryptocurrency was top of mind for everyone in 2021. The financial system as a whole faced a new kind of scrutiny, as events like the Game Stop Saga pulled back the curtain on the inequities of traditional investing models.


The world watched as a group of Reddit day-traders collaborated to push GameStop stock to soar, causing large hedge funds, who were attempting to short the stock, to lose millions of dollars. The worldwide attention of this event, combined with a contemplative pause created by a once-in-a-lifetime pandemic, and the successful impact of blockchain technology, shifted perspective in a way that put a microscope on the systems at hand, opening a collective eye towards new possibilities, possibilities that pointed directly to the crypto industry.


Source: Messari.io


Taking a look at the narrative from the top-performing industry assets according to data from Messari shows that Layer-1 blockchains and metaverse tokens performed at high rates of success. A few of the top-performing assets, like Axe Infinity (AXS), even showcased a YTD of 16,000% and a 5 billion dollar market cap, for perspective, any dollar invested saw a potential $16k return.


On the one hand, this is exceptional when compared to publicly traded companies in the stock market that can take 5-10 years to reach a market cap of 5 billion dollars. On the other hand, meme coins like Dogecoin and Shiba Inu hold a market cap of over $20 billion.


What does this say about the emerging crypto landscape? And how does that affect investing decisions for crypto enthusiasts? If the decentralized nature of cryptocurrency is aimed at dismantling the traditional systems and paving the way for every type of person to be able to make strategic investments, then why are speculative meme coins flooding the airwaves, while tokens that further the interests of the individual investor and the collective community sitting slightly outside the mainstream view?


Promising news indicates crypto companies are seeing exceptional potential on returns, showcasing the power of new companies and their fast earning potential. Infrastructure tokens like Polygon (MATIC) and Decentraland (MANA), represent sophisticated ideas that dynamically influence the industry, and create a foundation on which new companies can grow and build on top of them.


Source: marketsandmarkets.com


Before 2013, blockchain technology was almost solely linked to Bitcoin, but in 2015 Vitalik Buterin, co-founder of Bitcoin Magazine published a white paper that proposed a decentralized application platform. This led to the creation of the Ethereum Foundation, which launched in 2014.


Ethereum paved the way for blockchain technology to be used for purposes other than cryptocurrency. It introduced smart contracts and provided developers with a platform for building decentralized applications.


In 2020, Nearly 40% of respondents incorporated blockchain into production, and 55% viewed blockchain as a top strategic priority, according to Deloitte's 2020 Global Blockchain Survey.


Crypto companies and tokens that represent this foundation infrastructure of blockchain technology are booming with rocket-fueled interest, showing strong YTD in 2021, but the low market cap, especially in comparison to meme coins like Dogecoin, tells a story that has a different and more complex meaning.

Meme Coins and Speculative Investing

To understand the rumbling undercurrent that meme investing has brought to the industry, it’s important to look back at an event like the 2008 financial crisis.


The use of subprime mortgages by Wall Street and banks left a completely destabilized economy, plummeting overnight, where the trust in systems was flipped on its head. The event left people, both domestic and globally, to wonder if the financial systems they had come rely on, were not as unshakeable as they thought–and understandably! The crisis revealed that regulators were asleep at the wheel and that the traditional stewards of the industry were not taking responsibility for the financial health of our country and the globe seriously.


Sowing seeds of doubt proved fertile ground for “rebel” currencies, decentralized finance, and meme stocks, like GameStop and AMC, to take hold in a new way. As the financial collapse of 2008 created a need for the government to bail out the very industries that caused the crisis, student debt piled high, the gig economy forced 9 to 5’ers into working harder for less, and the overall vibe towards Wall Street and traditional hedge funds transitioned into a giant rolling side-eye.


Source: statista.com


The idea of money, and inherently its value, is challenged. If the government can pump out billions in bail-outs, then what is really the “thing” generating the value in those numbers we see on our screens? How much is the value of a currency based on the peoples' belief in that currency and what it represents?


The GameStop stock, and subsequently the AMC stock, challenged the systems at face value, asking Wall Street to directly put their money where their mouth is. Did it change anything or have any sort of destabilizing effect on those systems?


Not as far as experts can tell. And as of January 2022, both GameStop and AMC stocks have plummeted in value, now at their lowest exchange since the boom at the beginning of 2021. A crash that can be deduced to a public lack of interest and the distracted hype of a new thing.


But cryptocurrency is different from traditional stocks as it is built as a sophisticated and decentralized new wave of finance. The industry is essentially setting itself up to take over the financial world as we know it.


But just as we have seen with the GameStop and AMC stocks, the double-edged sword of popularity and infamy has splintered the industry, creating dueling crypto worlds, one resembling a casino-like playground and the other, a structurally sound landscape of building blocks.


Source: coinmarketcap.com 1/26/2022


Meme coins like Dogecoin and Shiba Inu have become a secure placeholder within the world of casino investing. Thriving on the hype and excitement of jumping on the bandwagon, and whose success is congruent with getting in on something before it gets too hot and then cashing out before it all comes crashing down.


For millions, this exact pump-and-dump scheme coincides with the idealized American Dream, a pathway to wealth that so much of the world has romanticized. Even after the 2008 financial crisis, banks offered homeowners incentivizing refinancing opportunities, but most people turned them away and deepened their suspicions of an unstable system.


Capitalizing on the notion of striking while the iron is hot, while simultaneously furthering the extreme distrust in the systems at hand, has birthed a chaotic mindset, as if to say, it’s all doomed so why not take a chance and risk big to win big?


Source: euronews.com


Meme coins are not traditionally backed by projects or ideas that hold true value in the ways traditional investments do, nor do they sustainably contribute to the evolving progression of the industry.


Instead, they are propped up by speculative investors, people whose interests are purely to pump the market up, gaining huge profits and exiting as soon as they have earned their desired return, leaving hopeful and often novice investors vulnerable to a devastating crash. As seen in the “Rise of Meme Coins” graph, both Dogecoin and Shiba Inu experienced incredibly high peaks and valleys that flipped in a matter of moments.


A volatile aspect of the industry that often leaves people with the wrong impression. Without anything to substantiate the value of these coins the people at the top, like Elon Musk and his popular Dogecoin, hype it all up and control the market.


When Musk appeared as the host of SNL he mentioned Dogecoin in his opening monologue which consequently lead to a 40% tumble after the show aired. He is now utilizing the popularity of internet virality to boost the value of the coins by publicly announcing on his Twitter that if McDonald’s starts accepting Dogecoin as payment, he will eat a Happy Meal.


The world watches all of this as entertainment, thinking they are in on the next best thing, but much like Wall Street the 1% still win, the hype for these meme coins comes down to clever marketing and staying relevant on the always distractable web, which appears to have a powerful effect, that's for sure.

Infrastructure Coins and Pillars Of The Industry

While meme coins continue to gain unsubstantiated high market caps and worldwide hype, flooding the internet with clickbait articles, pop culture memes, and Twitter punchlines; the infrastructure of the cryptocurrency industry is continuing to build and expand its bedrock foundation. Companies like BullPerks, a decentralized crypto VC company, and GamesPad, holistic gaming, NFT, and metaverse ecosystem, are aiming to influence a greater and more permanent change.


As pillars of the industry, foundational projects are being constructed to dynamically impact cryptocurrency. They have been doing this for over a decade, by cultivating a following and investors who are interested in establishing real value.


Pillar companies believe in this future, and the crowdsourcing and VC money fundraised to support their creation are going towards progressing that belief. That strong core value is what sets these infrastructure projects and their coins apart from the casino games that meme coins represent.


Source: coinlore.com 1/26/2022


Layer-1 blockchain tokens like Terra, Polygon, and Solana are the building blocks where new projects are created and can grow. Popular metaverse projects such as Decentraland, and Axe infinity, exist because the infrastructure from layer-1 projects allowed them the capabilities to do so.


This is so much more exciting than a meme coin, this is true technological innovation and exploration. This is laying down the blueprint of an entirely new way of interacting with the world. This is the value of something meaningful, something worth investing in, something that breathes a fresh breath of air for the future.


Ethereum (ETH) Price-Per-Day - USD

Source: statista.com


Ethereum (ETH) is likely a familiar name, but without much context as to the importance of its impact on the industry. It is a decentralized software platform that enables smart contracts and decentralized applications (dApps) to be built and run without any interference from a third party.


The goal behind Ethereum is to create a decentralized collection of financial products that anyone in the world can freely access, regardless of their nationality, ethnicity, or faith, essentially becoming a borderless, equitable opportunity.


This aspect makes the implications for some countries extremely compelling because those without state infrastructure and state identifications can get access to bank accounts, loans, insurance, or a variety of other financial products, outside of their current opportunities. The way that Ethereum influences the cryptocurrency industry and builds outside of itself as a way to further the progression of a decentralized financial future is what gives the coin its value, elevating it lightyears away from meme coins.


Infrastructure coins and the pillar projects built on top of them create real opportunities to dismantle the systems that the GameStop saga attempted to achieve. The decentralized future is real and it is here, being built by brilliant minds from all over the world.


BullPerks uses an extremely fine-tuned process of evaluating crypto-projects and helps to promote those projects allowing for VCs and investors to participate in supporting valuable assets.


GamesPad approaches the crypto-gaming industry from a similar perspective, high-value games, NFTs, and metaverse projects are cultivated in their ecosystem to ensure a foundational level of success.

Where Do We Go From Here? Moving The Industry Forward

Worth is community informed, and currency is a form of worth. In a new landscape where there is a true lack in depth of education and information, casino investing appears bright, shiny, and enticing. Meme coins can feel like a rush to the system, like a big middle finger to the man, and an exciting opportunity to "get rich quick". But is it all smoke and mirrors? It appears so when compared to the infrastructure coins and companies that have been structurally building the industry for over a decade and who put forth the effort and profits to continue to build value and worth; setting foundations, developing innovations, and mapping out a real future of new frontiers.


As of today, for most of the world cryptocurrency can feel like a scam. People read headlines from a skeptical eye, speculative investors continue to pump schemes into the market, and the hype continues its stronghold on the industry. But what if everyone just ignored the hype. What if instead of encouraging Elon Musk to eat McDonald's, we scroll past the clickbait headlines, hit “mute” on the meme coins, and take the time to view the emerging landscape for the value and worth that is truly being put into it.


If everyone decided to invest in pillar companies, and infrastructure coins, and educate themselves on the blueprint of a decentralized future, the future might not seem so far away. As the world turns on its axis and more of the population sees the truth of the systems for what they are, education and real depth of understanding of the crypto industry can provide hope and excitement for a financial future to come–and that sure as hell is worth the hype.