With all due respect to the naysayers, I’m not Cassandra.
At the last check, bitcoin prices are a little over $21,000. But let’s imagine a situation that some will see as the worst-case scenario: a price crash that takes Bitcoin to $5,000.
Would this be a disaster, some kind of black day for crypto?
I was asked this question recently and I was surprised because I never thought it could go below $10,000. But after thinking about it, I replied no, it wouldn’t be that bad.
I know that for maximalists who see the king of cryptocurrencies at $100,000 in the medium term, Bitcoin at $5,000 would be a nightmare.
The first consequence would be a plunge in the broader cryptocurrency market, which is currently valued at $1 trillion, according to data firm CoinGecko. Bitcoin accounts for 40% of this.
There are currently 19.1 million bitcoins in circulation, for a total value of more than $401 billion at current prices of $21,000. If prices crashed to $5,000, Bitcoin’s valuation would drop to $95.52 billion. About $305 billion would be destroyed.
Lots of people will lose lots of money. As painful as this is, many of them will stop looking at the price of Bitcoin day by day, minute by minute, and many will likely lose interest in Bitcoin altogether.
And that’s good!
The crypto industry is equal to cryptocurrencies?
One of the biggest problems in the crypto industry today is that the general public is reducing the entire industry to digital currencies.
And generally when people talk about digital currencies, they talk about price. And when they talk about the price again, they are talking about speculation.
Last year, a lot of people became interested in cryptocurrency because they heard that prices are skyrocketing and they could get rich quick. (Big mistake.)
But if Bitcoin really takes a hit and people stop thinking about instant wealth and retirement, the intense focus on cryptocurrencies will evaporate. The industry could then start from scratch and change the narrative to show that it is much more than just digital currencies.
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It would give the crypto industry a chance to go back to the original promise: build an alternative financial system to democratize finance and make it accessible to everyone, everywhere.
Developers can focus on developing products and services and making sure the fundamentals – especially security – are solid. And regulators, who have played cat and mouse with the industry, could take a breath, engage with industry leaders and stakeholders, and provide the clarity the industry has been asking for.
finance for everyone
At the end of 2021, during my last trip to Africa, I had the chance to chat with some young people. I expected them to tell me they knew something about bitcoin and maybe ether, the second digital currency by market value.
In fact, I was pleasantly surprised. They knew the crypto industry well. They talked about everything that the crypto industry would change for them: giving them access to financial services (banking is a luxury in many African countries that mainly serves the wealthy); and enable them to trade directly with people worldwide.
Above all, however, the idea that they too could participate in this new economy was in the foreground. They didn’t seem to have forgotten the promise: the promise of financial services for all that would give a chance to people who are often systematically excluded.
Bitcoin at $5,000 would also allow the industry to do some necessary self-examination.
No more secrets
One of the things that drives prices down is a lack of transparency. Transparency cements trust. A lack of transparency breeds doubts, distrust and the idea that something is being kept secret.
As a journalist, I have to say that it is more difficult to get information about those responsible for a crypto project than about those who work in traditional financial institutions.
I recently spoke to a crypto lender who was looking to buy out other ailing crypto lenders. The enterprise wouldn’t say where his headquarters were. After research, we found out where it was, but a company spokesman demanded that it not be mentioned.
Here’s a company that wants to buy companies whose main problem was a lack of transparency, and the buyer himself insists on secrecy. That needs to change.
If one of the worst aspects of mainstream finance is secrecy and a lack of transparency, the crypto industry cannot disrupt old institutions by doing the exact same thing.
Finally, at $5,000, Bitcoin would eliminate projects that are of no use. More than 13,000 coins are listed on CoinGecko, and experts say more than half of those coins are empty shells.
It is about time they disappear to avoid being scammed by naïve investors who will blame the entire crypto industry for the efforts of bad actors. The industry doesn’t need this bad publicity. Your mission is too important.
