The New Crypto Economy

Crypto is the easiest way to become a millionaire, right? Well, it certainly is the fastest way to lose a million dollars. If you invested $1,000,000 in the cryptocurrency Luna in April, you would have a paltry 48 cents today. Yes, you read that right. 48 cents. Not even enough to buy a newspaper to read about the cryptocurrency crash rocking the world today. Many people who’ve invested their life savings in “phenomenal” cryptocurrencies are now scrambling to take out their investments. From teenagers to boomers, everyone who bought into the hype is now facing devastating losses. Inevitably the burning question arises: What does the future hold for cryptocurrencies and NFTs?

Let’s cover the basics

What are cryptocurrencies and NFTs? Cryptocurrency is essentially a digital currency that is decentralized, and not reliant on the government, banks, or any central authority. Some examples include Bitcoin and Ethereum. NFTs are non-fungible tokens, and are the rights to digital images. Most NFTs are purchased using cryptocurrency. Buying an NFT gives the buyer the digital rights of the image, but anyone can freely use the image.

The crypto journey

Between 2009 and 2021, Bitcoin’s trajectory did one thing: it skyrocketed. From a price lower than a penny in 2010, Bitcoin became insanely popular after 2017, launching itself to more than $60,000 per bitcoin in 2021. Then came crypto winter in 2022. A glimpse at the growing trend of Bitcoin is enough to tell you about its future. Down 71% from its peak of $64,000, the hype of Bitcoin has faded since 2022. Ethereum, another popular cryptocurrency, is also dangerously fluctuating at the $1000 mark, down from its high of $4000.

The crash of the crypto Luna, fueled panic selling which caused a $10,000 decline in Bitcoin. Luna was branded as a safe investment that ended up crashing primarily due to declines in other cryptocurrencies. The domino effect of this has indicated that there will likely be several such crashes in the future, leading to the loss of billions of dollars for investors. The threat of recessions also decreases investor confidence, which is critical for crypto.

What the future holds for crypto

Will Bitcoin and other cryptos recover in terms of price? Maybe not. But despite the massive decline and the fading of cryptocurrencies from mainstream investing, Bitcoin is slowly transforming from an investment to a base layer for future innovations. SImilar to how Apple transformed from selling hardware to building a creator economy, Bitcoin is doing the same, coming with a huge cost. Bitcoin creates a whopping 40 billion pounds of emissions, and uses more energy than Norway! The environmentally non-friendly cryptocurrencies may need to rework the methods of mining in the future for survival, as consumers shift to eco-friendly products. Especially after the Luna crash, governments are likely to limit crypto mining and trading to protect their citizens and the environment. Bitcoin and other cryptocurrencies must consider innovations like Ethereum, which plans to reduce its emissions by 99% by switching its mining model.

Above all these factors, however, lies Elon Musk’s Twitter, which created most of the hype surrounding crypto. His endorsement of the meme cryptocurrency “Dogecoin” made it a serious investment. Many people have little intricate knowledge about cryptocurrency, and just blindly follow Musk’s tweets, of which 80% are jovial in nature. Especially after his Twitter purchase, Musk has become a key crypto influencer. After all, who wouldn’t want to listen to the richest man in the world when he says a crypto will shoot up.

NFT’s rollercoaster ride

Let's move on to NFTs. NFTs have become an investment of their own. Take the Bored Ape NFTs, a collection of 10,000 unique digital images of a primate. Each sells for around $100,000, down 78% from its April peak of 429,000 USD. The hype for NFTs however, has certainly died down. Remember those self made millionaires from NFTs back in 2021? Well, the buyers of the NFTs are now struggling to break even, like Sina Estavi. After buying an NFT of the first tweet for 2.9 million, he put it on auction, at the time of writing, the current bid was less than $20,000. NFTs don’t seem to be going anywhere for now after the buzz has ended, however they could be the start of a cryptocurrency based creator economy where people buy and sell digital products using cryptocurrency.

According to Economic Times, “The metaverse and crypto cannot be separated as the underlying tech for both are the same and crypto is an integral part of metaverse governance and functioning”.

Crypto: Passing fad or here to stay?

In a nutshell, without innovation, both crypto and NFTs are doomed. In this rapidly changing ecosystem, Personally we foresee many positive changes to crypto in the near future. Hopefully, just like Tim-Berners Lee invented the World Wide Web, someone will be able to modify crypto to revolutionize the world and bring about change.