Ah, the question we ask every time the crypto market crashes: Is Crypto Dead? Bitcoin has been declared dead hundreds of times by the mainstream media since its inception, yet somehow Bitcoin is still here.
What has been failing or dead?
If you have been reading the news, you probably know many crypto companies that have collapsed over the years. In the early days, one of the most prominent exchanges, Mt. Gox, collapsed and took tens of thousands of Bitcoins under its bankruptcy proceeding. In the most recent 2022 crypto meltdown, several crypto companies spectacularly collapsed one after another: Terra/LUNA, Celsius, FTX, and BlockFi.
On top of that, many crypto projects failed to deliver on their promises and silently disappeared. EOS, one of the early Ethereum killer projects, has not been making significant progress after so many years in development.
So.. Is Crypto Dead?
Not all crypto companies and projects are created equal. Most companies mentioned above are centralized entities. This centralization is against the premise of cryptocurrency: decentralization.
These centralized companies are all controlled by a single management team. And unfortunately for them, the management team did not perform their job well. Some of them even committed fraud. The failure of this kind of company is not an indicator of the failures of the crypto industry. Indeed, their collapse is healthy for the industry because we just removed ‘bad actors’ from the space.
How about the failed crypto projects?
There have been many crypto projects that have never seen any adoption. More than 95% of crypto projects failed. Again, not all crypto projects are created equal. Bitcoin and Ethereum have been doing well and have seen massive adoption. Like the startup industry, only a small percentage will survive and make an impact, while the rest will fail.
We believe crypto is not dead because many major crypto projects are still gaining traction and expanding every day. Traditional companies have established partnerships with these crypto projects to adopt their technology in their businesses.
How to prove crypto is not dead?
Are fundamentals fine?
Total Value Locked (TVL)
One metric to measure how well crypto projects are doing is the total value locked (TVL) within the project. This metric is more relevant for L1/L2/DeFi projects. TVL tends to drop during a bear market, while in a bull market, the TVL will shoot up significantly. Instead of worrying about the market cycles, we can see the overall trend over the years to see if more and more money comes into the crypto ecosystem.
This chart shows the Ethereum TVL over the years. ETH TVL was at ~$200 million in early 2019 and ~$23 billion at the end of 2022. That is 100x higher.
Binance Chain TVL was at ~$15 million in late 2020 and ~$4 billion at the end of 2022. That is more than 250x higher.
Network activities and participants are strong
Another metric to value a project is its on-chain network activities and participants. The more participants in the network, the more distributed and secure the network is. The more activities on its network, the more valuable the project is due to its network effect.
The Bitcoin network has seen massive growth in its number of transactions and addresses. Its growth has been quite exponential in the past decade.
Developer activities are strong
Another metric we can track to know whether a project is doing well is its developer activities. For L1 chain projects, the number of active applications built on top of it is a good metric to track. We call this the ecosystem of the project.
This ecosystem map shows some projects built on top of the Ethereum blockchain. The list has been growing yearly.
Here are some of the projects that are building on the Cardano blockchain. The list has been growing fast for Cardano.
Or, try it yourself. Does it work?
Try sending your Bitcoin from one wallet address to another wallet address. Does it work? The Bitcoin network is still producing blocks, so your transaction should still be processed. Nothing has changed fundamentally.
Do we see more usages and adoptions?
Another success metric to measure is the adoption of blockchain and cryptocurrency in our daily life. How have all these crypto projects been used?
Bitcoin is a legal tender in El Salvador
The law made El Salvador the first country to accept Bitcoin as legal tender and to require businesses to accept it as payment. This adoption is a breakthrough that we have never seen until 2021.
You may read the news here: https://www.npr.org/2021/09/07/1034838909/bitcoin-el-salvador-legal-tender-official-currency-cryptocurrency
Institutions acquiring Bitcoin as their treasury asset
Some big companies started buying Bitcoin as part of their liquidity reserves and assets. Some of the most prominent ones are MicroStrategy (NASDAQ: MSTR), Tesla (NASDAQ: TSLA), and Block (NYSE: SQ).
Traditional companies adopting crypto
Traditional companies have started adopting blockchain technology into their business:
- Crypto companies can now issue Visa debit cards, so you can spend your crypto anywhere the Visa network is accepted.
- Twitter allows you to tip other users using Bitcoin. It also allows you to use your NFT as your profile picture.
- Walmart uses VeChain for food logistics tracking.
More adoptions will be coming as more companies embrace blockchain technology.
Traditional companies issuing NFTs
Many companies, such as NBA, Adidas, Coca-Cola, FIFA, Lamborghini, and TIME magazine, started issuing their own NFTs. If you are curious, why not get one yourself? If you are a fan of basketball, this can be of interest to you: https://nbatopshot.com/
Bitcoin and Ethereum ETF approved in Canada
It has never been easier for institutions to invest in Bitcoin and Ethereum, thanks to these ETFs approved in 2021: Purpose Bitcoin ETF (TSX: BTCC) and Purpose Ether ETF (TSX: ETHH). If you do not prefer to handle the self-custody yourself, you can buy those ETFs.
More people make crypto transactions
The population who made crypto transactions at least once in the past month is about 900 million. This number will likely continue to increase in the coming years.
Conclusion
You will keep hearing “Crypto is dead” or “Bitcoin is dead”.. Mainstream media will keep repeating this narrative every time a bear market comes. But guess what? This article was written during the depths of a bear market, and you can see the data pointing to healthy fundamentals. Crypto is probably not dead. On the contrary, crypto is growing fast. Will you be part of it?
