It is now time for Bitcoin to either ”put up” or ”shut up” – at least according to a fresh op-ed piece in Bloomberg. Furthermore, the author behind it, an economist, goes on to argue that a price crash could conceivably be good for the overall adoption of Bitcoin.
The economist in question, Tyler Cowen, is a professor at the George Mason University in Virginia. Moreover, his opinion editorial begins by recounting the rough market conditions experienced by cryptocurrencies during the most of 2018.
Cryptocurrency price collapse could be good for crypto
However, instead of taking the oftentimes seen ”doom-and-gloom” outlook, Cowen argues a market crash could actually be beneficial. He states that a collapse in the price of cryptocurrencies might be necessary to ”take the next step forward.”
In fact, Cowen argues that such a situation would have historical precedent. More specifically, Cowen points to how the collapse of railroad stocks in the 19th century did not inhibit the growth and adoption of railroads.
He also likened such a scenario to how the dot-com crash of the early 2000s allowed for future transformation. According to Cowen, companies like Amazon or Google needed the dot-com crash to ”clean out the bad companies.”
Nevertheless, Cowen also notes that ”this history is no guarantee crypto will take off.” It does, however, provide some food for thought for those claiming that a price collapse would make cryptocurrencies irrelevant.
His opinion piece says that cryptocurrencies have, until now, been plagued by ”too many junk ideas.” Nonetheless, he suggests that this is natural for a quickly growing asset class.
Has the time come for cryptocurrency to ”go on a diet”?
Specifically, Cowen highlights cryptocurrency assets’ collective rise from ”basically zero to $800 billion” as inviting both fraud and innovation. Due to this, he argues that it ”is hard to tell the good from the bad.” However, Cowen suggests that a temporary reduction in the cryptocurrency sector’s size might solve this.
”Now the time has come for crypto to go on a diet. No more easy money. No more thoughts about ICOs leading to quick riches,” Cowen writes in his Bloomberg piece.
He notes that there are many areas with very real applications for cryptocurrencies – but he also says the technology now needs to ”prove its social worth.”
Cowen also references journalist Daniel Gross’ works, which propose that bubbles can spur investment in new and uncertain sectors. Nevertheless, Cowen’s opinion will most likely be met with at least some skepticism by the wider cryptocurrency community.
”I am modestly optimistic,” Cowen writes, stating that ”it is time to put up or shut up. Let us hope that this ’do or die’ moment will once again bring out the best in entrepreneurs.”
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Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the blockchain industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.