Crypto-Currency Market : Re-establishing trust…

Any market is technically a nexus of trust contracts.  Currency in particular is very much nothing but a trust contract. The cryptocurrency market is therefore all about TRUST.

Right now, we are seeing a lot of bleeding in the market, irrespective of which cryptocurrency we consider.  Will there be an end to this bleeding and, if so, when? – this is the question all of us have in our mind. Let us look at the answer from the trust angle.

Let us go back to the beginning.

Trust event 1 -> When we lost trust in our banking system after the crash of 2008, we were void of trust. That is when Bitcoin came into existence. It brought that very thing – trust!! People jumped into it, because trust itself was getting re-established. The market steadily rose, and people who could see the whole thing got handsomely rewarded.

Trust event 2 ->  Everything was going more than fine! And then we experienced the Mt. Gox event. The Mt. Gox exchange, which had been handling more than 70% of bitcoins, suddenly announced that 850,000 bitcoins – equivalent to 450 million USD – had been stolen.  At the time, that was a major portion of the bitcoins that were in circulation. Guess what, we lost trust – anybody could lose trust with such an event. The whole market tanked.

Trust event 3 ->   People all over the world lost trust after Mt. Gox. The market went back to less than 80% of its peak and was lingering and limping sideways. What was needed was a trust event big enough for the world to perceive that cryptocurrency has a big future and we should trust it.  It was announced that Tim Draper was the winner of a 30,000 bitcoin Silk road auction.  Bitcoin being brought by a very successful VC, one who had invested in and supported many many good technology companies, re-established trust and conviction in people. So people started looking at bitcoin again, and we were heading towards the good old days once more.

Trust event 4 ->  ICOs raising huge money without any significant value to show.  We saw some good ICOs and some bad ICOs, every one of them raising money like crazy – with insane valuations or sometimes even absurd valuations.  It didn’t matter what the concept was, what stage it was at, what maturity level – all ICOs (more or less) were raising lots of money. This could not go on.  When some ICOs raised large sums of money and were unable to even issue tokens properly, market participants started losing trust.  They started thinking seriously and re-visiting their own trust in this market.  Already they were a bit wary of scaling for ICOs, with the Bitcoin segwit debate and the Ethereum disappointment. The trust was broken when the ICOs raising money were not even able to distribute the tokens properly.

Now we are in a place where the trust is broken.

Bitcoin and the cryptocurrency space have immense potential. The value to humanity of decentralization is unquestionable.  Each one of us needs to help re-establish the trust – it is our duty to help build trust if we believe this is a place where we want to be in the long term. Let’s hope we have a bigger trust-establishing event, sooner rather than later. Only such an event could help us establish the trust in the market soon, otherwise the market is going to remain sideways or even downwards, without direction for quite some time.  I would love to see another trust-building event and see the heights of the potential that this market can bring to us and generations to come.

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