Crypto VC Thoughts: Crypto Business Cycle 2
I wrote the first part of the crypto business cycle without offering a solution. So here is the second part of the solution.
Image credit: https://cryptocurrencyfacts.com/market-cycles-in-cryptocurrency/
The market cycle follows the psychology of the market cycle. The crypto market seems to follow the stock market cycle, but I'm afraid I have to disagree.
It follows a doughnut business model 🍩.
The real growth of the crypto ecosystem is not scaling as many projects try to achieve.
Instead, we should focus on sustainable growth.
Image credit: https://doughnuteconomics.org/about-doughnut-economics
The cycle of cryptocurrencies has eliminated many coins created in the past decades. Many of the creations failed simply because they only focused on one aspect of the currency - scalability.
Since cryptocurrency is the concept of money, the newer version of cryptocurrency is better and easier to use. Similar to technology advancement, the latest technology invention is always better.
From a toaster that baked bread to a wifi toaster connected online to bake bread through voice control and automatically-collected data to adjust the baking method through machine learning and to achieve custom baking, it all looks pretty advanced technology to serve a better more than a toaster can do.
The problem with the cycle of technology advancement is unsustainable growth that only focuses on growth itself.
They do not focus on the benefits that to generate through those cryptocurrencies.
What are the benefits of using Ethereum instead of using Bitcoin? Besides the blockchain constraint to only allow me to spend on Ethereum to purchase NFTs, I cannot use other cryptocurrencies to purchase the same NFT.
Many cryptocurrencies are constrained within their blockchain and cannot perform cross-chain payments, limiting their usage. Many have been abandoned due to their underutilized, and the market crashed to push users further away.
The potential of cryptocurrency is to embrace the global financial market without being influenced by the traditional market.
