Crypto Will Survive

Another difficult week for the crypto market, but Bitcoin continues to cling on to the $20k mark at the time of writing. Whilst it's certainly been a very stressful period for crypto, we've seen periods like this before and like the others, this period shall pass.

It's worth taking a moment to remind ourselves why cryptocurrency and in particular Bitcoin is here to stay.

The Bitcoin network has been running non-stop for over 13 years now. During this time it has never missed a beat. Irrespective of politics, financial markets or any other external body it just keeps processing those transaction blocks every 10 minutes. During this time it has never been hacked, never had a major code bug and never paid any attention to any government bans.

Over these 13 years the total number of bitcoin that will ever exist has remained the same at 21 million, with just over 19 million bitcoin mined so far. Meanwhile, over the same period the total supply of US dollars has increased from around $1 trillion to around $6 trillion. Central bank money printing has caused inflation of fiat currencies such as the dollar to become completely out of control.

The domino effect of the failure of one over-leveraged crypto company then having knock-on effects on other crypto companies and funds is painful to watch. However, there is a certain purity about the crypto ecosystem that causes it to self regulate. There will be no government bailouts. No kicking the can down the road. Some crypto companies will fail and in many cases that will be a good thing as it will clear out businesses that were not well managed or were taking too much risk. It is cathartic, and it gets the pain out of the way relatively quickly unlike the endless propping up of the legacy fiat currencies by central banks, which just masks the problem whilst it continues to grow.

What will remain is solid, well-run businesses that will now be further battle-hardened by this crisis. Whilst it can be difficult to see at the current moment, crypto will emerge stronger than ever once the market stabilises. The level of talent in the crypto community is incredibly high, adoption levels are at all-time highs and the idea of sound digital money that can be sent anywhere in the world and which can't be manipulated by governments is too compelling for the crypto ecosystem to do anything other than continue to grow.

We welcome any feedback, so please just email us at info@definda.com if you'd like to get in touch.

Matt & the Definda team