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Blockchain, Cryptocurrency, Featured

Will the Crypto Collapse Hinder Blockchain Adoption? No, Here’s Why!

The crypto market made a sharp drop at the beginning of 2022. Last week the market tumbled again along with the global stock market. The downfall was a wake-up call for traders to identify the necessity of a regulatory framework to adjust the impact of market volatility. However, in the entire universe of blockchain technology, crypto is a prosaic product. It is important to understand various aspects of the technology before ruling it as a positive possibility or a scam.

A Striking Collapse of Crypto Community Market. Here’s Why?

In May 2022, the crypto market faced a downfall of 36% and extended a clue to the market analysts. The collapse was the result of a death spiral triggered by the Luna stablecoin attached to the Terra blockchain. The coin exemplified only 3% of the cryptocurrency that exists today. As people feared losing more money, panic selling started in the crypto community.

Although the cryptocurrency crashed for the second time last week, the crypto market is still worth nearly one trillion dollars. Many of the 19000 existing crypto coins are valued in billions. However, the majority of them have flunked. The crypto market is volatile but not because of blockchain technology. Rather, it is due to the associated risks between everyday money and new technology. If history is considered, crypto market volatility and instability are not new.

Also Read: Real Estate Tokenization: A Blockchain Revolution in Brew

Early Trend That Attracted Investors

Between 1990 and 2000, similar to the crypto market today, internet stocks were too a white knuckle. Back at the time,  people gambled their money in casinos. No matter what the idea was, anything with an “e” in front attracted investors and media. Almost every day people made huge amounts of money and lost them. However, while these ideas were burning, turmoil was taking place. Even with all the bloodbath going on in casinos, the internet made it through and survived. 

Also Read: Bear Market Led Many Crypto Firms Cut Jobs, While Others Look For Feasible Growth

Terra USD: A Wave That Shook The Crypto Community

In 2018, the company behind TERRA USD and Luna, Terraform Labs was formed in South Korea by a computer scientist, Do Kwon. The now thirty-year-old Mr. Kwon has made headlines calling his critics cockroaches and poor. Even with the lack of polish in his work and technical issues addressed by the analysts, he was successful in generating two hundred million dollars between 2018 to 2021 in investment capital. 

The company was showing off their success in reaching an elusive purpose in the crypto community and establishing a truly decentralized stablecoin. Stablecoins are in between ordinary money and crypto coins. They are not affected by the market volatility and hold a stable value. However, it has never worked without the help of traditional real-world collateral nor has it become a decentralized platform itself. Mathematical invention and mechanism assured Terra Luna, as a stable coin in an algorithmic stablecoin system. Like other high-flying stocks, Terra Luna also failed drastically causing pandemonium in the crypto community.

These kinds of risks can go undetected only for a limited period of time. However, once the risk takes over the market, it not only takes away money from people but also makes you lose on some good projects. The market crash of 2008 made an estimated loss of ten trillion dollars only in the United States itself. 

As Terra Luna dropped further, its supporters, known as Lunatics were confused between hope and terror as Mr. Kwon sold more than one billion dollars in bitcoin to restore stability. However since there was not enough cash coming in, to match up with the outflow, the plan didn’t work out. Among various market experiments, Terra Luna stands to be the largest making a loss of sixty billion dollars in total market value.

Need for A Crypto Regulatory Framework

The vehement crypto rivals have taken the collapsed market as the perfect opportunity to celebrate the death of blockchain technology. They also insisted on declaring crypto as a fraud market. Responsible investors and traders of the crypto market are working on developing a crypto regulatory framework that will help to stabilize the crypto community. Today, there are several crypto laws already existing, Securities and Exchange Commission, Commodity Futures Trading Commission, and Financial Crime Enforcement.  

The internet is deeply knitted into the world’s media, economies, industry, politics, and social life in both good and bad terms. In similar ways, a new crypto revolution will soon take over the crypto community. The underpinned technology of crypto, blockchain technology has a lot more potential than exchange platforms and crypto coins. Today, the technology is adopted by various industries like finance, healthcare, and supply chain management. 

Will Blockchain Application Survive?

Imagine a future where you can look up where your tax dollars end up, where the government corruption doesn’t exist, music, art, games, and important stories do not disappear, where rather than depending on a big company you can buy or sell solar energy from and to your friends and neighbors. Blockchain technology makes it possible to keep tamper-proof information, and safe for anyone to access. 

The crypto crash has led to washing away the genuine application of blockchain technology and how it can revolutionize the way our world works. Blockchain technology helps in managing cargo on ship vessels, locating the source of conflict items, transferring real estate titles, and assuring the food safety that people consume. With the help of technology, one can locate the origin of the jewels that they buy from a local store. 

According to researchers, the millions of items sold on Walmart are on blockchain technology which helps the company track the whereabouts of the products. The global shipping company Maersk, uses the technology to track their shipping containers, and track them to make an easy transfer of them through customs. Unilever, Kroger, Nestle, etc are also using the technology to track goods. 

The chief executive officer of Everledger, a company that registers every certified diamond on the planet based on blockchain technology, has already registered 2.2 million diamonds since 2014. The company registers forty different measurements of every stone and tracks the source of stones and the location from where it is mined. 

Today, blockchain technology is not only used by companies but also implemented by the government. Dubai has expressed its intent to become the first blockchain-charged government in the World. Since one of the mundane applications of the technology recognized by the people is in the crypto industry the recent collapse has raised doubts about its application in future. 

In Conclusion

It is too early to conclude that blockchain will change the future. However, technology has the power to change how the world works in future. The valid cynicism of the technology is that it is rather incremental than revolutionary. If the technology manages to survive the circus crypto market, it will change the way the internet works.

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