Ethereum-based tokens, which recorded astronomical gains against Bitcoin in the bull market in 2017, are well on their way to seeing the low prices of all time against both Bitcoin and the US dollar.
Over the past eight months, the Bitcoin price has dropped more than 70 percent, from $ 19,500 to $ 6,500. In contrast, tokens lost a further 70-80% against Bitcoin, showing huge losses in value.
Ontology, Wanchain, OmiseGO, Zilliqa, Pundi X, ICON and other tokens that recorded gains of 50% -200% compared to Bitcoin until the beginning of 2018, collapsed by drastic margins.
With a few exceptions like 0x and VeChain, the vast majority of tokens remain 80% cheaper than Bitcoin.
What is the future of tokens?
cryptographic market, tokens are like leverage trading; if the price of Bitcoin remains stable or increases slightly, tokens rise to 10-30%, but if the price of Bitcoin drops slightly from 1 to 2%, the tokens record a drop from 10 to 30%.
But despite the occasional peaks in the value of tokens, it is important to recognize that a large decline in value does not guarantee a large upward peak.
Jonathan Cheesman, a partner of Distributed Global and a cryptocurrency investor, recently argued that tokens did not fall dramatically against Bitcoin and the US dollar due to correction, but rather because of the excessively high expectations of the cryptocurrency community towards the process of decentralized applications (dApps) and blockchain networks.
"The crypt pendulum has probably become negative territory on Ethereum.The problems they are facing – the construction of a decentralized, secure and scalable intelligent contract protocol – is an extremely difficult innovation.The expectations were clearly too high and now we are gravitating towards a more reasonable place, "Cheesman said.
Building decentralized systems is difficult, since it solves unprecedented problems related to cryptography, cryptography and security. Augur, for example, a decentralized forecasting market on Ethereum, took more than two years to be implemented in the Ethereum intelligent contract protocol, due to the complexity of implementing projects in a decentralized manner.
Tokens present high-risk high-yielding opportunities, which are difficult to ignore for investors in the cryptocurrency market, as many investors attempt to inflate their existing cryptocurrency properties such as Bitcoin and Ethereum with short-term transactions.
But, as Cheesman said, the 2018 correction was an alarm bell for the tokens and major cryptocurrencies in the industry, and investors within the market will have to consider cryptocurrencies as an asset class. emerging based on a technology that is still in its infancy.
"That said, this is a must-have for people at Consensys and other projects – once the door is open to market forces, it can not be closed and investors have expectations that need to be managed." The main discrepancy here is on the timeline – this is an early stage technology and should be appreciated as such, "he added.
Where Do Tokens Go Next?
On the level of the basic protocol, many public blockchain networks such as Ethereum have seen real progress in downsizing with the development of solutions like Plasma and Sharding. Until dApp demonstrates a strong network effect and interconnection, as suggested by the creator of Gnosis, it will be highly unlikely that the tokens will reach the previous levels guaranteed in the bull market in 2017.