{"id":788,"date":"2023-01-03T23:19:35","date_gmt":"2023-01-03T23:19:35","guid":{"rendered":"https:\/\/lesswing.com\/?p=788"},"modified":"2023-01-03T23:19:35","modified_gmt":"2023-01-03T23:19:35","slug":"winters-end-is-near","status":"publish","type":"post","link":"https:\/\/lesswing.com\/index.php\/2023\/01\/03\/winters-end-is-near\/","title":{"rendered":"Winter’s End is Near"},"content":{"rendered":"\n

Cryptocurrency has been depressed for over a year<\/strong> since Bitcoin peaked in November of 2021. The downturn has been called a crypto winter<\/em><\/a> that was partially due to the reduced disposable income of investors due to inflation.<\/p>\n\n\n\n

While cryptocurrency was depressed, we experienced a collapse of FTX, a major exchange. FTX was an easy-to-use exchange that allowed day trading<\/a> across multiple cryptocurrencies. In order to participate in the exchange, you first need to convert your cash into tokens. Unfortunately, the operation was not properly backed by reserves and their problems further\u00a0shook consumer confidence<\/strong>. Investing in cryptocurrency has always been a gamble.<\/p>\n\n\n\n

The first crypto winter<\/em> occurred between 2018 and 2020<\/a> when attempts to create markets for tokens did not materialize. It became difficult to secure startup capital. I attribute the first winter to an overestimation of the returns<\/strong> of token-based businesses. Investors counted on the value of each token and not on the services they could purchase. <\/p>\n\n\n\n

As we begin 2023, we should examine how long the winter will last and what the next crypto spring<\/em> will bring. <\/p>\n\n\n\n

Winter’s End<\/h5>\n\n\n\n

Analysts differ about when the downturn in cryptocurrencies will end with estimates ranging from early 2023 to late 2025. \u00a0Government regulators will begin dealing with cryptocurrency exchanges as the next\u00a0wave of blockchain applications<\/strong> appear in Q4 2023.\u00a0 These will not be based on the tokenomics<\/a> (creating company value by selling tokens) we saw before the first crypto winter.<\/em> Instead, the next wave will feature pay-as-you-go service procurement. <\/p>\n\n\n\n

A full recovery in the value of cryptocurrency should happen in mid-2024. Subscriptions will still be the basis for most business arrangements and the transition to pay-as-you-go will take many years. As subscriptions are up for renewal, alternative payment methods that match business cycles will be available. The movement towards pay-as-you-go should continue after the recovery.<\/p>\n\n\n\n

Springtime for Blockchain<\/h5>\n\n\n\n
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The years of creating a token out of thin air and making millions are over. The music has stopped. We\u2019re back to our regular programming of having to create real value and solving real world problems.<\/h6>\nDavid Martin<\/a><\/cite><\/blockquote>\n\n\n\n

Blockchain has been called a solution looking for a problem<\/a> for many years and I think we have learned a lot from the first two winters<\/strong>. Instead of a fast buck, companies will deliver meaningful services through blockchain applications. This approach avoids the cause of the second crypto winter<\/em>; a lack of valuable services.<\/strong> <\/p>\n\n\n\n

Companies will pay for services when they need them<\/a> instead of predicting usage ahead of time to match the ups and downs of the real estate business. The infrastructure to deliver services already exists. Blockchain businesses need to improve the value proposition of their services.<\/p>\n\n\n\n

Improvements to blockchain-based services require advancement in areas that include:<\/p>\n\n\n\n