The latest in the slew of crypto critics is Jackson Palmer, the creator of Dogecoin. Palmer claims that thanks to the proliferation of scam ICOs, a similar fate might be lurking in wait for the rest of crypto as that which caused him to leave his pet-project in 2015.
For those who don’t know what Dogecoin is, it was released in 2013 as a way for Palmer to satirise the hype surround Bitcoin and blockchain technology. He branded his project using the image of the dog from the Doge meme, you know, “such humor. Much funnies” – that kind of thing. The amusing crypto’s inventor had intended his creation to highlight how insane he found the investment of large sums of money into unknown assets like cryptos.
The joke was lost on many, however, and investors bought Dogecoin anyway. In terms of market cap, the eventual all-time-high for the joke-coin was $400 million. Eventually, the currency attracted scammers and hackers who would take advantage of the hyped and inexperienced market that had sprung up. Operations included the hacking of wallets, and making fraudulent claims about fake products. Finally, Palmer stopped working on Dogecoin.Recently, he warned that a similar fate might soon befall the rest of crypto. He mentioned the current goldrush-like nature of the ICO craze:
What’s happening to crypto now is what happened to Dogecoin… I’m worried that this time, it’s on a much grander scale.
Yet again, the market takes a hit, and the “crashes”, “bubbles”, and “tulips” are trotted out.
At its current immature phase, the cryptocurrency market is prone to wild swings in its valuation caused by various external factors. The chief of these is regulatory measures, like those pending in China right now. Secondary, is the introduction or discovery of some Blockchain breaking technology, or destructive code placed into one of the various updates of a protocol. If something simultaneously causes the entire market to sell one commodity en masse, its price will, of course, fall rapidly. It’s as simple as that. How low it goes will depend on the gravity of the news and how much it affects investor confidence.
It’s no secret that the market is currently largely built on speculation but daily, more real-world uses are emerging for various cryptocurrencies. Bitcoin is being used to buy up real estate in Texas, Steem powers a young and growing social network, and Ether whilst predominately used for ICOs (themselves at risk of causing a mass crypto selloff) at present, is used by various applications progressing towards completion. As more potential uses for the decentralised emerge, the value will shift from speculative to actual for some platforms. Many, of course, will perish.
People love to use the “tulip” example from seventeenth-century Holland when talking about any potential market bubble. Interestingly enough, they also like to group this idea with that of the “tech boom” of the late ‘90s. To me, these “bubbles”, although caused by wild speculation like that which we see in crypto today, are totally different. Firstly, tulips had been around for a long time and do not offer any revolutionary properties – the internet, and blockchain tech are potentially highly disruptive technologies. Secondly, with such ground-breaking innovation, the eventual use and therefore value of cryptos cannot be accurately gauged. Are cryptos even currently overbought? If you look at graphs of investment in tech companies which show the “bubble” and compare them with those of crypto market caps, the answer could easily be “no”. The tech industry wasn’t overbought in the early noughties, but just as there is in crypto today, there was plenty of dumb money in a lot of stupid shit back then.
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