There’s no shortage of unrealistic cryptocurrency projects, coins that have not been updated in years, have outdated technology, or are put up companies that have impractical or improbable goals.
It is this uncertainty that troubles Ethereum cofounder, Charles Hoskinson.
His thoughts arrive after a number of alternative digital currencies have made substantial gains in recent weeks, with investors looking beyond the most prominent one of them all — Bitcoin. Then again, Charles believes that the future is bright and solid projects will remain once things settle.
Crash and consolidation
The surge of lesser known tokens to unprecedented levels over the past month or so has sent the total market capitalization of all virtual currencies up to three quarters of $1 trillion. But Hoskinson is concerned about the unrealistic cryptocurrency projects that have started to enter the space.
His view is that the cryptocurrency market is head for a crash and then a consolidation period, whereby the Bitcoin alternatives that lack substance will have failed.
“What’s going to occur is a lot of these ventures that don’t have strong fundamentals, don’t have good tech, or just unrealistic projects, they will eventually run into some major wall they can’t quite overcome. They will fracture up and you will see a lot of them are certain to fail.”
That said, he believes that many of these cryptocurrency projects will not fail any time soon, and that’s because of the fact that most of them have enough funding behind them to sustain themselves.
Even with a burn rate of $5 million to $10 million a year, it’s smooth sailing when you have $1 billion of capital — which is something that many of these ventures now have to their name.
Nevertheless, the market never fails to churn up surprises.
It was not all that long ago that Ripple saw its XRP token temporarily overtake Ether as the second largest cryptocurrency. That was in late December, though, and Ethereum has gotten back in the game, charting new ascents for itself since.
An equally remarkable incident took place more recently, however, as Dogecoin saw its market value increase to $2 billion on Sunday — just days after hitting $1 billion. This is a cryptocurrency that was inspired by a meme and introduced as a joke in 2013.
In fact, Jackson Palmer, the founder of Dogecoin put it best when he aired his thoughts that the virtual coin he helped create has reached such a high valuation, despite the project not releasing a software update in more than two years.
“I have a lot of faith in the Dogecoin Core development team to keep the software stable and secure, but I think it says a lot about the state of the cryptocurrency space in general that a currency with a dog on it which hasn’t released a software update in over two years has $1 billion market.”
Then again, this case is not unlike Dentacoin, a dental care focused digital currency, which also briefly surpassed $2 billion in market capitalization on the same day. It is designed as a blockchain solution for the global dental industry, and has seen a lot of action over the past few weeks.
At the end of the day, it only makes sense that the projects that bring something new to the table, have a workable solution, and a solid development team and roadmap behind them are the ones that are left standing.
Whenever the market correction comes.
If at all.