Aaron Brown is a staff writer for Bloomberg and former Chief Risk Manager at AQR Capital Management, a fund that currently has just under $200 Billion AUM (Assets Under Management). Recently he gave an interview to HODL Finance where he answered five questions about the state of the crypto markets and what he sees for the ecosystem going forward. His answers should help to shed some light on what’s happening with the price and how the bear market has affected crypto.
What Crypto Needs to do to Survive
According to Brown it’s adoption that matters more than anything else. “There are almost unlimited potential uses of cryptocurrencies. – But all these require people to design and build the right systems, which in turn requires investors to fund the effort and only succeeds if users are willing to learn the new tools.”
He’s clearly bullish on all of the possible use cases for crypto but Brown makes the point that ease of use is paramount. People won’t sign up for services that make their lives harder or are difficult to learn.
The Silver Lining of the Bear Market
When asked about any positive aspects of the massive increase in prices in 2017 and subsequent crash, Brown had this to say.
“The run-up and crash pulled in about $20 billion in investor funding. Some of it was stolen or frittered away, but most went to support and is still supporting useful development. It did a lot to clarify legal and regulatory issues, and it pulled in a lot of financial institutions. It raised public awareness and stimulated a lot of developer ideas. The boom pushed crypto forward 3 to 5 years in my estimation.”
In his view the bull market of 2017 helped to inject billions into the crypto ecosystem which is still fueling development and growth now, even as we move towards the second quarter of 2019.
Further, Brown believes that if the crash hadn’t happened there would have been too much money still invested in useless projects. As the prices have fallen it’s created a self-selective process whereby only those projects with the most value and highest chance of adoption have survived.
Does Crypto Need Fiat?
Speaking on stablecoins and fiat gateways like decentralized exchanges, Brown made the point that, “when crypto meets fiat is where all the excitement and attention is, but it’s the sideshow, not the main event. If crypto is useful, it will thrive whether it’s easy, hard or impossible to exchange crypto for fiat. If crypto is not useful, it will flop.”
In other words, the success of crypto is not going to be determined by how easy the onboarding process is. If it’s useful people will find a way to use it. If it’s not then they won’t, even if the onboarding process is dead simple. Let’s hope then that in the coming years crypto becomes indispensable, widely adopted and Aaron Brown’s prediction, that one day Bitcoin could finance 2% of the world’s finance, comes true.