As we look beyond the market activity of cryptocurrency, we have to keep in mind we are dealing with a technology. Projects are that being built are technological in nature. When we look at basis of development, we see a much larger backdrop.
This leads us to some conclusions based upon the history of technology. It is a concept that is vital in the cryptocurrency world and a reason why we have to pay special attention to what is being built.
Technology advances society. Those that are able to utilize technology to revolutionize an industry (or create a new one) benefit greatly. For this reason, we have to focus upon the fact that winner takes most when it comes to technology.
We have a concept that can help us to sift through a lot of the mess that is now cryptocurrency.
Our most recent history is the evolution of the Internet. Leading up to the dotcom bubble, there were many startups and companies that garnered a great deal of attention. This was something that was fed by venture capital money. We also, like today, had markets go crazy over new ideas.
Unfortunately, as is always the case, most did not work out. There are a variety of reasons for this. It could be a lack of funding. Perhaps the team lacked the expertise to bring things to market. The timing might have been off.
Whatever the culprit, the fact is these entities failed. This is something to keep in mind when it comes to cryptocurrency. It is easy to jump on the "next big thing".
After all, didn't we get a glimpse of this during the ICO days. Certainly, we acknowledge there were a lot of scams. However, many projects had good intentions yet went nowhere. Most are long gone, a sign of what things will be like 5 years from now. A lot of what is discussed today will not be around by the latter part of this decade.
When was the last time you used AskJeeves? Did you see WebVan lately? Even the original iteration of Napster went away.
Now that we are pessimistic, there is a bright side to all this. Those projects that are successful, when it comes to technology, are make booms. In other words, the game changers become very valuable.
Again, we only have to look at Web 2.0 and see Amazon, Google, Facebook, Priceline, and Netflix to see how this works. Consider the long established companies these wiped out. Not only did they affect the traditional industries, they came to dominate the web traffic. Amazon is still, by a wide margin, the leader when it comes to online purchases. That is a major statement considering that almost all retailers have an online presence.
In the "real" world, companies with a 90% market share are often called monopolies and broken up. However, when it comes to technology, this is just par for the course. It is a natural occurrence that keeps repeating itself.
Consider this implication with something like ChatGPT. The race is on to see how will dominate that sector, if it does become that. Perhaps it is just an iteration on the path to something bigger.
Understanding that most of what we see with blockchain and cryptocurrency will not succeed is a major advantage. It is also a way to help us to keep things in the proper perspective.
If we focus ourselves to Hive, we have a major question. Is this going to be a player going forward?
This is something to consider. We will likely do a follow up article focusing upon this specifically. For now, let us branch out to the projects. The key here is that a lot of what we presently look at will not be here for the long term. This is how things work.
Basically, we are looking for things that can be market dominant. The benefit to this industry is that, at the early stages, we can help influence this. It will also net out some major winners.
We did gain some insight into this concept with Splinterlands. During the last bull market, the valuation on a lot of the assets skyrocketed. As the game became the leader in the blockchain gaming world, it sucked in a ton of value.
Therefore, even in the early days, we see how this works. This brings up the question of whether a project can expand while maintaining that position. We know there are other projects seeking to take the title.
When people say crypto will fail, they are mostly right. In the large percentage of the cases, we are looking at stuff that will be absolutely worthless.
However, if we move beyond that, we realize the winners are going to be the household names in the future. The point is the entire industry is not going to fail. We are looking at the basis of Web 3.0 being created. This is going to generate, in my view, tens of trillions of dollars in value.
So where is this going to end up? Simply, in the hands of the winners. Those projects that end up achieving a strong network effect will realize how much value is driven their way. It becomes a moat that is hard for others to break.
What we are dealing with is a modern day gold rush. The reality is trillions are on the line yet most people are asleep. They do not make the vast fortunes because they are always behind. Life changing money is possible yet it is not without risk. Everything will not succeed. In fact, most will end up as nothing.
It is easy to get caught up in hype. This is something that propels markets. However, the question we need to keep asking is whether this (whatever we are looking at) is going to become one of the few winners. There are going to be a lot of projects that drift along. Some might even hang around.
That said, the value is going to reside elsewhere. Here is where building from the bottom is essential. If we get a large number of people focused in the same direction, it can have a major impact.
Keep this concept in the back of your mind as you look at different projects. With technology, it is winner takes most. Is what you are looking at capable of achieving that end?
It is the lesson from the technology world.
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