A New Philosophy in the Market: Assets Embodying Technology | coindesk JAPAN | Coindesk Japan

Recently, while listening to comments from people who are skeptical about crypto assets, “So you said there is no value,” I realized something. In other words, I didn’t fully appreciate how the public’s perception of crypto assets had changed since the last time the price rose from a bear cycle.

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During the last bear market, crypto assets were the new type of money, the global computer, the incentive for engagement, and the value of governance.

But now, for ordinary people, crypto assets are a market.

Like many of you, I spent the New Year’s Eve trying to explain to family and friends that cryptocurrency is “not over.” This misunderstanding puzzled me for a while, but then I understood.

The crypto-asset market has not been financialized. We are aware of this as well as the damage to image and sentiment caused by the failure of those who have achieved financialization and those who have benefited from it.

But instead, crypto assets have become just a market for those who don’t quite understand it, like bystanders. just a market. With the market in trouble, the concept has clearly lost its meaning.

Easy-to-understand, catchy story

Looking back, it’s not hard to see how this shift happened.

Growing interest from institutional investors (Goldman Sachs! Fidelity! BlackRock!), prices (up 20% in a day! down 80% since the start of the year!), fraud (rag pull! unauthorized access!), and regulatory concerns (Protect Your Investors! Protect Your Financial System!) spawned eye-catching news, and more like it.

The link between “crypto assets” and “high risk” was repeated and strengthened as the media reported news about crypto assets.

I’m not saying it’s the media’s fault. Many media outlets are doing an excellent job of communicating the innovative aspects of the cryptocurrency industry. However, perceptions and images tend to focus on things that are easy to understand.

The general public is familiar with the market, but they don’t necessarily understand the Merkle Tree. Price movements are easier to visualize than consensus mechanisms. The growing interest from institutional investors is more obvious than weighted diversified liquidity pools. Market stories tend to be more popular than technology stories because they are comfortable. Stories about risk are more popular than stories about innovation, because dramatic developments attract a lot of attention.

Hearing this, some people (especially among those involved in crypto-assets) may instinctively want to focus more on the technological aspects of crypto-assets. Many people, myself included, have argued so. But there is another fundamental aspect that has been largely overlooked, and certainly understandable.

Asset and Technology

We understand that crypto assets offer opportunities for speculation and investment. We also know that it is a fundamentally new technology. We industry players understand that crypto has both sides.

However, it is difficult (especially for ordinary people) to understand that crypto assets are technology.

For the first time in history, we have a tradable asset embodying innovation. Investors can invest in technological advances through stocks and exchange-traded funds (ETFs). But they are routine revenue streams that only become accessible to the general public long after the innovation is first tested.

Amazon, for example, was founded in 1994 and went public after struggling as a startup for three years. Facebook was founded in 2004, but went public in 2012. Both were considered too risky for mainstream investors before going public. Even after going public, the stock was extremely volatile and remained so for some time.

And even the two companies don’t necessarily make good comparisons. Neither Amazon nor Facebook is new technology. Both companies are demonstrating new ways to use technology. And both, especially in recent times, have seen their share prices fall due to corporate decisions and earnings prospects based on the fiat economy.

Crypto assets such as Bitcoin (BTC) and Ethereum (ETH) are new technologies. Technically, it’s an asset that runs on a new methodology, but neither the asset nor the methodology can function without each other and have no value. There is also no behind-the-scenes strategic decision-making or earnings risk due to difficult economic conditions. It’s like buying Internet stock in 1985, without corporate risk, in a way that allows you to purely invest in its adoption.

A whole new evolution

Additionally, crypto-assets enable support for innovation in ways that traditional tradable assets do not. It is a product of pure technology that can be invested by anyone, anywhere, without any special conditions.

Sure, there are risks, but new concepts are almost always risky, and learning and platform disclosure rules can provide some degree of protection without creating barriers that foster inequality.

Crypto assets are more than just a market. It’s not just about new technology. A new way to think about value, risk, funding and engagement. Add a dash of philosophy to your financial soup, add a dash of creative code, sprinkle a splash of zing, and mix it all up for a whole new evolution.

This year, we may be able to get that message across better. That might get us a more thoughtful critique and a more nuanced approach to regulation.

By thinking more about the message, perhaps even we in the industry can enter the next market cycle with even greater confidence that our efforts mean more than we think.

Mr. Noelle Acheson: Former head of research at CoinDesk and Genesis Trading.

｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Image: Shutterstock
｜Original: A New Philosophy of Markets: Assets That Embody Technology