The creator of Dogecoin, Jackson Palmer, pens a most thoughtful piece at Vice: My Joke Cryptocurrency Hit $2 Billion and Something Is Very Wrong. I recommend reading it in its entirety, but if you’re just skimming, here are some thoughts.
What I noticed was a shift away from developing the core technology powering these networks to churning out shiny new projects that shoehorned in “blockchain” wherever possible.
This is absolutely true, considering this was something he watched from afar between 2015–2017.
There is a popular saying in financial markets along the lines of, “When your taxi driver is telling you to buy stock, you know it’s time to sell.” Basically, when a stranger with (presumably) little experience in the stock market is giving you tips, it’s an indication that the market is too popular for its own good. Having been out of the cryptocurrency space for two years, in early 2017 when my Uber drivers started talking to me about Ethereum, I knew we were entering a renewed period of speculative crypto-mania.
Don’t forget that its not just Uber drivers, but people at the hair salon, and so on.
Dogecoin’s valuation is the result of market mania that has resulted in inexperienced investors buying up low-priced assets on a whim, hoping that they will follow Bitcoin’s meteoric trajectory. This irrational enthusiasm, coupled with large players manipulating largely unregulated markets, has resulted in a weekly cycle of rallies and crashes across just about every crypto asset.
At the same time, it seems like Bitcoin’s original anti-establishment principles are being diluted even further. We’re seeing money pouring into the industry from large institutional traders, and Bitcoin futures contracts—basically betting on whether Bitcoin’s price will go up or down—have begun trading on Wall Street. Which leaves me asking: what happened to removing the supposedly corrupt financial institutions from the table?
Still, I can’t concede that it’s game over for cryptocurrencies. It’s difficult to predict how much the current crypto bubble will inflate, or when it’ll burst (not if). The burning question on my mind is this: Once the cryptocurrency price bubble pops and takes all the hype with it, will the community be able to recover the energy it needs to build real, innovative technology once again?
Echoes my thoughts wholeheartedly. Let’s build more tech.