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Bitcoins are displayed in front of a bitcoin price chart of the Bitfinex cryptocurrency exchange website on November 20, 2018 in Paris, France. & Nbsp; (Photo: illustration of Chesnot / Getty Images)
The global cryptocurrency market has already seen over $ 706 billion of its total market capitalization evaporated since it peaked in early January, according to the CoinMarketCap research site, and those losses seem to trigger a shock in the wider blockchain community in China . Many startups are finding it increasingly difficult to gain access to capital, as investors become skeptical about fundamental statements about digital currencies and the blockchain technology that supports them.
With the visions of a new decentralized world order, many blockchain initiatives had propagandized with the promise of new disruptive applications that would send industries down and revolutionize economies. But on closer inspection, many of those startups were exaggerating their potential benefits or the time it would take to reach them.
"It's a time of disillusionment – as much as I am a believer in the long-term destructive power of blockchain, it can not solve all the problems in the world," says Bonnie Cheung, a 500 startup venture partner. "You do not know how many times we have read the proposals that claimed to solve all the critical points for almost all sectors."
But ten years after the publication of Satoshi Nakamoto's famous white paper that gave birth to the concept of blockchain, there are still no killer apps or transformation platforms in terms of real-world blockchain use cases. Even the most mature payment application – in the form of cryptocurrency & nbsp;– seems to lose ground. The use of bitcoins in & nbsp;transactions managed by the main payment processors& nbsp; it fell by almost 80% in the year to September, according to Chainalysis.
"What has been reported by the media that about 40% of blockchain projects have been closed is too conservative," says He Ning, chief operating officer of QOS, a company that aims to create the infrastructure for commercial activities of large-scale blockchain.
"For any industry, about 20% of startups should fail when the market value of the sector drops by 10% With the kind of market collapse that the cryptography market has seen lately, almost all speculators have gone, but it's not enough, I think it's necessary to get rid of 99% of cryptographic exchanges and unrealistic projects for the arrival of a new wave of bull market, "he says.
To be sure, even if confidence in blockchain initiatives has been falling in China and industry participants have abandoned the industry or are preparing to do so, there are still others who are trying to cash in on the market. incident, and some early adopters are even celebrating what they see as a healthy wake in the industry.
"The blockchain industry has wiped out some poor quality projects and the barrier to entry to the sector has increased, which is positive for the industry's future growth," said Hubery Yuming Yuan, CEO of Huobi China, who he left the Industrial Securities brokerage firm to join Huobi in March. "The bursting of the bubble (crypto) has led to a more rationalized industry and we have seen more practical attempts in blockchain applications."
Yuan believes that many strong projects are continuing their development work and have not been affected by market recessions. "Solid public blockchain projects and numerous decentralized popular apps are gaining momentum," he says. "Chinese companies and conglomerates continue to explore new cases of use of blockchain."
It is increasingly clear that the bear market of cryptocurrencies has accentuated a bifurcation of the market.
"Only a few projects – most likely those under the big institutions – will eventually do well." Eventually, the winner takes everything, "says Xinghua Luo, co-founder of BBShares, a hedge fund that offers indexed funds in cryptographic assets. Luo is among those who continue to bet on the long-term future of cryptocurrency as an alternative asset class that will eventually be incorporated into most investment portfolios.
If the future of the blockchain is "the winner takes all" and a concentration of success by some of the best Chinese players, what does it mean for a fundamental promise of decentralization of the blockchain?
The prospects for blockchain applications have become tighter, and more and more people are starting to suggest that China's blockchain ecosystem will ultimately have to function mostly within a centralized structure. And the recent buzz on security token (STO) offers represents a new form of token offering that exemplifies this because it actually complies with existing legal frameworks.
At the beginning of this month, an investor and co-founder of a Chinese blockchain project staged a dramatic start. Yang Ning of CDC, an intelligent contracting platform that aims to build a decentralized global data asset exchange on blockchains, blew up the entire industry in a media interview, proclaiming that the future of the blockchain may exist only under a centralized legal structure. For example, programs that would fall under the authority of the Chinese Ministry of Industry and Information Technology.
The case of Yang is somewhat emblematic of the dilemma of the blockchain community, and this is the centralization that occurs naturally in many markets. Bitcoin, the largest of the cryptocurrencies, has seen a significant level of centralization in the mining, asset holding and distribution of computing power. It is said that Bitmain Technologies has about 42% control of the hahrate of the bitcoin network – a measure of & nbsp; computing power dedicated to the extraction of the digital currency. It is also the largest producer of bitcoin mining machines and manages the largest bitcoin mining pools.
Moreover, the cases of use of the real world of the blockchain are showing signs of becoming more closely defined. "Unlike steam engines, electricity, computers, artificial intelligence and quantum computing, blockchain is not a productivity revolution," said Yuan of Huobi. "Blockchain is similar to printing, paper making and the Internet, it can free up productivity even if it is not a fundamental technological breakthrough."
While markets seem likely to remain volatile, blockchain investors are facing unexpected challenges. For Bonnie Cheung of 500 Startups, even blockchain success could mean complicated problems. For example, how to get out of truly distributed systems that generate huge revenue, but are they hard to sell as a resource?
"How do you convert an investment that started as a venture capital agreement to something that almost ended up as a bond?" Can you lend this link? "These are all interesting questions that will need to be resolved in the future," Cheung says.
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Bitcoins are displayed in front of a bitcoin price chart of the Bitfinex cryptocurrency exchange website on November 20, 2018 in Paris, France. (Photo: illustration of Chesnot / Getty Images)
The global cryptocurrency market has already seen over $ 706 billion of total market capitalization evaporate since it peaked in early January, according to the CoinMarketCap research site, and these losses seem to trigger a shock in the wider blockchain community in China. Many startups are finding it increasingly difficult to access capital while investors become skeptical of the fundamental statements about digital currencies and blockchain technology that supports them.
With the visions of a new decentralized world order, many blockchain initiatives had propagandized with the promise of new disruptive applications that would have driven industries to revolutionize and revolutionize economies. But on closer inspection, many of those startups were exaggerating their potential benefits or the time it would take to reach them.
"It's a period of disillusionment: although I am a supporter of the blockchain's long-term destructive power, it can not solve all the problems in the world," says Bonnie Cheung, a 500 startup venture partner. "You do not know how many times we have read the proposals that claimed to solve all the weaknesses for almost all sectors."
But ten years after the publication of Satoshi Nakamoto's famous white paper that gave birth to the concept of blockchain, there are still no killer apps or transformation platforms in terms of real-world blockchain use cases. Even the most mature payment application – in the form of cryptocurrencies – seems to lose ground. The use of bitcoin in transactions managed by the main payment processors almost 80% fell in the year until September, according to Chainalysis.
"What has been reported in the media that about 40% of blockchain projects have been closed is too conservative," says He Ning, chief operating officer of QOS, a company that aims to create the infrastructure for commercial activities of large-scale blockchain.
"For any industry, about 20% of startups should fail when the market value of the sector drops by 10% With the kind of market crash that the cryptography market has seen lately, almost all speculators have gone, but it's not enough. "We got rid of 99% of cryptographic exchanges and unrealistic projects for the arrival of a new bullish wave market," he says.
To be sure, even if confidence in blockchain initiatives has been falling in China and industry participants have abandoned the industry or are preparing to do so, there are still others who are trying to cash in on the market. incident, and some early adopters are even celebrating what they see as a healthy wake in the industry.
"The blockchain industry has wiped out some poor quality projects, and the barrier to entry to the sector has increased, which is positive for the future growth of the sector," said Hubery Yuming Yuan, CEO of Huobi China, who left the Industrial Securities brokerage firm to join Huobi in March. "The bursting of the bubble (crypto) has led to a more rationalized industry, and we have seen more practical attempts in blockchain applications."
Yuan believes that many strong projects continue their development work and have not been influenced by market recessions. "Solid public blockchain projects and numerous decentralized popular apps are gaining momentum," he says. "Chinese companies and conglomerates continue to explore new cases of use of blockchain".
It is increasingly clear that the bear market of cryptocurrencies has accentuated a bifurcation of the market.
"Only a few projects, most likely those under the big institutions, will eventually be fine, but will eventually win everyone," says Xinghua Luo, co-founder of BBShares, a hedge fund that offers funds indexed in cryptographic assets. Luo is among those who continue to bet on the long-term future of cryptocurrency as an alternative asset class that will eventually be incorporated into most investment portfolios.
If the future of the blockchain is "the winner takes all" and a concentration of success by some of the best Chinese players, what does it mean for a fundamental promise of decentralization of the blockchain?
The prospects for blockchain applications have become tighter, and more and more people are starting to suggest that China's blockchain ecosystem will ultimately have to function mostly within a centralized structure. And the recent buzz on security token (STO) offers represents a new form of token offering that exemplifies this because it actually complies with existing legal frameworks.
At the beginning of this month, an investor and co-founder of a Chinese blockchain project staged a dramatic start. Yang Ning of CDC, an intelligent contracting platform that aims to build a decentralized global data asset exchange on blockchains, blew up the entire industry in a media interview, proclaiming that the future of the blockchain may exist only under a centralized legal structure. For example, programs that would fall under the authority of the Chinese Ministry of Industry and Information Technology.
The case of Yang is somewhat emblematic of the dilemma of the blockchain community, and this is the centralization that occurs naturally in many markets. Bitcoin, the largest of the cryptocurrencies, has seen a significant level of centralization in the mining, asset holding and distribution of computing power. It is said that Bitmain Technologies has about 42% control of the hahrate of the bitcoin network, a measure of computing power dedicated to the extraction of the digital currency. It is also the largest producer of bitcoin mining machines and manages the largest bitcoin mining pools.
Moreover, the cases of use of the real world of the blockchain are showing signs of becoming more closely defined. "Unlike steam engines, electricity, computers, artificial intelligence and quantum computing, blockchain is not a productivity revolution," said Huobi Yuan. "Blockchain is similar to printing, paper making and the Internet, but it can free up productivity even though it may not represent fundamental technological progress."
While markets seem likely to remain volatile, blockchain investors are facing unexpected challenges. For Bonnie Cheung of 500 Startups, even blockchain success could mean complicated problems. For example, how to get out of truly distributed systems that generate huge revenue, but are they hard to sell as a resource?
"How do you convert an investment that started as a venture capital agreement to something that ended up almost like a bond? Can you lend this link? These are all interesting questions that will need to be resolved in the future," Cheung says.
