Blockchain Value and Technology
An optimists point of view.
CNET is reporting that after a major market correction in blockchain values, NFTs are almost at their demise. Unfortunately, as tether worked its way from its peg, a major catastrophe ensued, pulling the value of almost all NFTs with it. What are NFTs, and why do they matter so much in the world of blockchain?
NFT is an acronym for Non-fungible token. The first two words should have been a warning for would-be investors trying to make a quick buck on the blockchain market. Non-fungible. Non-fungible means that you aren’t getting any of the perceived value out of your coins under any circumstances. It means that they are only valued based on their hype, and artistic merit. So, where does that leave us today, as we stand at the edge of a breathtaking drop in market value and simotaneously watch as the DOW teeters back and forth, seemingly minutes from following Tether and blockchain’s seeming demise? Fortunately, low-volatility stocks have weathered the crash fairly well, which leaves me somewhat optimistic about the future of the market.
Inflation, volatility, collapse of the NFT market, and potential food shortages leave us whirling, looking for answers about the potential for the future. Normally, this leaves us looking towards technology looking for answers. Technology suffered a minor setback all things considered. More rounded and well-invested technology companies such as HP have made it though the cycle in relatively good shape. Companies such as Nvidia who are somewhat tied to the crypto market since their hardware supplies much of the crypto market with blockchain mining equipment saw drastic losses this month, leaving it down over 25% just this month.
How will blockchain dig its way out? As a believer in cryptocurrency and blockchain technology, despite the hits that have been taken in this economy, I think that the recovery in blockchain lies solely in the ability of the technology to provide unique business growth opportunities in specialized markets. Eg, using blockchain technology to accomplish security goals. Distributed ledger technologies, or DLT is not at its end because non-fungible tokens lost their value. The brilliance of the technology is just scratching the surface of its potential uses.
Earnst & Young was eyeing the potential for blockchain technology in 2017, from a risk perspective of a CFO. As a risk-averse investor, I believe E&Y is totally accurate in their assertion, though I also add an optimistic twist. The value of bitcoin, blockchain, and tokens will lie in their ability to move the technology forward, rather than their ascribed value in a bull market.