Image Source: Pexels

We’re currently seeing an explosion of innovation in blockchain and cryptocurrency, the likes of which we’ve never seen before in a monetary system. This explosion is, however, ever evolving and we need to stay alert to constantly learn from the failures. 

Over the past month we’ve seen the value of the entire cryptocurrency market more than halved and Bitcoin (BITCOMP) plummet to below $20,000. It’s been a brutal correction and has triggered the onset of the “crypto winter” we have all been bracing ourselves for. 

There is still a lot more pain to come in the crypto markets, though, if not in all markets. This is thanks in large part to the Fed once again leading the news flow by indicating that the US may not, in fact, be able to avoid a recession. As it turns out, the “transitory“ inflation Fed chairman Jerome Powell dismissed a few weeks ago is a more sticky and crippling situation that will need more interest rate hikes to tackle. This is a challenging and scary time for the average household, and we can no longer move forward with faith that the Fed will fix all of our problems. 

We need to turn our heads towards cryptocurrency to get out of this financial mess. However, the cryptocurrency world has its own problems. The good news is that these are problems that we can pull ourselves out of if we are willing to learn from past mistakes. Crucially, for cryptocurrency to survive, we must decentralize. If we do this, we can move the crypto world in the direction of providing maximum value and utility to all of its users and away from massive greed and a continuation of the boom and bust cycle that characterises traditional finance.

How we act now in this delicate situation could make or break many areas of the cryptocurrency world. Although crypto has been plummeting, investors are still keen and ready to buy. However, as we’ve seen, it doesn't take much for mass-selling events to happen. This is what we saw with UST-X, and it is continuing to play out. Right now, we are nowhere near the bottom. 

We need to pay attention and use this current downturn as a lesson. We have to remember that cryptocurrency was founded to be a decentralized monetary system designed by the people for the people. The cryptocurrency world has since turned into somewhat of a centralized monolith, with a few massive companies now dominating trade flow. 

Cryptocurrency is based on facts, transparency, data, and the masses; it is supposed to work for the people. This is why cryptocurrency needs to be the future and why we need decentralization and technological soundness. The emergence of decentralized finance in 2020 went some way to achieving this, but it is still a tiny portion of the overall market and continues to face its own challenges in terms of technological soundness. 

Nonetheless, decentralization is the future. Unless we decentralize, we will see a repeat of what is happening right now in traditional finance thanks to the shortsighted policies of central banks only concerned with propping up failing companies and maintaining the status quo. We have a way out of this endless greed cycle and we need to act on it. 

Right now we’re seeing centralized giants under fire, Celsius (CEL-X) of course, with others set to potentially follow in its footsteps. Even UST was not an entirely decentralized endeavor, with one very big personality and a few whales dictating its rise and ultimate fall. As long as these big centralized entities are led by people and companies interested only in themselves, crypto will not reach its ultimate potential. 

Nor will crypto reach its ultimate potential if we continue to use the US dollar – which is facing its own dramas right now – as the only measure of value. The NFT arena presents some light at the end of the tunnel here, as this is an area that has transitioned almost entirely to valuing everything that it does in ETH. In this space, the psychological disconnect allows participants to distance themselves from what’s going on in the main markets and the bigger cryptocurrencies. 

We are now at a crucial crossroads for blockchain and cryptocurrency. The Crypto Winter is going to clear out much of the trash in the sector, while giving serious developers and projects time to define and refine their product offering. Cryptocurrency could fall with the rest of the economy, or it could be our way out. Let’s hope this next phase of development leads us in the direction of the latter.