- Remarkably, today,
almost anyone with an internet connection
can create a bona fide digital currency.
It speaks volumes to the power
of the global digital revolution that is underway.
With a credible crypto offering,
there's significant revenue to be made.
And some solutions have the power
to introduce game-changing innovation.
These reasons alone are providing motivation
and enthusiasm for a high number of entrepreneurs
to enter the crypto marketplace.
While creating a cryptocurrency
may be relatively quick and easy,
maintaining one that has a chance to succeed
is a much harder proposition.
It is a long-term commitment.
And beyond the technical requirements,
it will require the fostering of a community.
That certainly won't be easy
with thousands of cryptos vying for attention.
An important question to ask
is what is the purpose of this new cryptocurrency.
Does it offer some novel capability,
like Ripple, Ethereum, or Polkadot do?
For the foreseeable future,
the evidence suggests that as often as cryptos disappear,
more new ones will replace them.
Correctly the overall number of cryptos continues to expand.
Any marketplace, though,
has a cap on the number of participants it can sustain.
We're far from that,
but at some point, there will be a market rationalization.
Will leaders like Bitcoin, Ethereum,
Litecoin, Tether, and Solana continue their growth?
Or will they meet the fate of many industry first movers?
We'll know soon enough.
The volatility and the uncertainty of cryptocurrency
both adds to the excitement in the space
and the high degree of risk.
Issues such as the absence of regulation,
continued skepticism
from influential people and organizations,
criminal usage, technological immaturity,
such as scalability and stability,
cybersecurity vulnerabilities
that have resulted in billions of dollars of theft,
and other factors are all at work
pushing back on an industry that has forward momentum.
For individuals who want to incorporate cryptocurrencies
into their investment portfolios,
there is money to be made,
but the risks continue to be high.
For example, crypto exchanges get hacked,
and loads of times they become unavailable,
limiting users' ability to trade or access their funds.
Those who want to use crypto
to buy and sell products and services,
the market is growing.
But uncertainties
about the medium-to-longterm legal frameworks
are a constraining barrier.
Consumer protections and market oversight,
qualities that have defined traditional financial products
are largely still absent for cryptocurrencies.
Arguably, this is by design.
But does it continue to make sense?
For governments and traditional financial institutions,
big questions are being raised
about the longterm impact of cryptocurrencies.
At the core is the concern about whether cryptocurrencies
are complementary to existing political,
economic, social, and financial systems,
or do they pose too great of a risk to permit
in the longterm?
As we've seen,
some countries have already made up their minds
on this question.
For now, the challenges that cryptocurrencies present
for individuals, organizations, and governments
will remain significant,
but so too will the advantages.
As we've seen in other industries
and with other innovations over a few centuries,
a path forward, one way or the other, eventually emerges.
What that path looks like for crypto right now
in the long term is somewhat cloudy.
It should clear up soon.