China gets Skeptic on Cryptocurrency and Blockchain

China gets skeptic on Cryptocurrency and Blockchain

The cryptocurrency market hit its peak early in January this year. Investors and analysts alike had predicted that the market would continue to soar and money would flow in at a greater pace than ever before. But that didn't happen. The global crypto market has already lost $706 Billion of its total market capitalization, according to CoinMarketCap, with China, which has heavily invested in the market, being skeptic whether to continue investing in the field or quit flat out.

Most of the new companies or firms which have dived into the crypto and blockchain market had promised of various new applications which would have widespread applications and revolutionize the way we live. But, on further analysis, it was found out that they were either too tight on the timeframe required to achieve the desired results or simple exaggerating the benefits offered.

As Forbes reported in this article, "It is a period of disillusionment. As much as I am a believer in the long-term disruptive power of blockchain, it cannot solve all the problems in the world," says Bonnie Cheung, a venture partner at 500 Startups. "You don't know how many times we have read proposals that claimed to solve all pain points for almost every industry."

Its been almost a decade since the concept of Bitcoin was introduced to the general public, and ever since then, the most advanced form of cryptocurrency hasn't been able to capitalize on the advantages of the technology. According to Chainalysis, almost 80 percent of the transactions have dropped till September 2018.

"What has been reported by the media that around 40% of blockchain projects have shut down is too conservative," says He Ning, chief operating officer of QOS, a venture that aims to create the infrastructure for large-scale commercial uses of the blockchain.

"For any industry, around 20% of startups should fail when the sector's market value drops 10%. With the kind of market collapse the crypto market has seen lately, almost all speculators have left, but that's far from enough. I feel it takes around getting rid of 99% of crypto exchanges and unrealistic projects for a new wave of the bull market to arrive," he says.

Even though the faith in the blockchain technology has begun to fade in the minds of the Chinese investors, there are still people who are willing to invest in the industry with some early adopters celebrating the shakeout of poor projects.

"The blockchain industry has flushed out some poor-quality projects, and the entry barrier to the industry has increased, which is beneficial to the sector's future growth," said Hubery Yuming Yuan, CEO of Huobi China, who left brokerage firm Industrial Securities to join Huobi in March. "The (crypto) bubble burst has led to a more rationalized industry, and we have seen more practical attempts at blockchain applications."

He firmly believes that many strong projects are continuing their journey and are not severely affected by the market crash. "Solid public blockchain projects and numerous popular decentralized apps are gaining momentum," he says. "Chinese enterprises and conglomerates continue to explore new blockchain use cases."

"Only a few projects – most likely those under big institutions - will eventually do well. Ultimately, it's winner takes all," says Xinghua Luo, co-founder of BBShares, a hedge fund offering index funds in crypto assets. Luo is among those who are continuing to bet on the long-term future of cryptocurrency as an alternative asset class that eventually will be incorporated in most investment portfolios.

PC: Pablo, Unsplash

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Anurag Chawake Opinions expressed by techsutram contributors are their own. More details

I am an Engineering Student with a keen interest in Blockchain, Cloud Computing, AI, ML and related startups. I am currently working with Techsutram as a Writer/Intern.

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