Why the cryptoeconomy crash is impossible

Jun 13, 2018

An article by Oliver Dale has gained popularity among crypto enthusiasts on the Internet. There he speculates on the factors, which can lead to a crash of the cryptoeconomy, according to the black swan theory*.

The black swan is the term which was coined by Nicholas Taleb. This is the name of a certain improbable event which can have huge consequences.

Here Oliver Dale separates three “black swans” which can have extremely negative consequences for the cryptoeconomy, up to the disappearance of cryptocurrencies — it’s a ban on cryptocurrencies all over the world, blockchain code failure (if there is a serious error in a blockchain that makes it possible to break it), the threat of hacking and forks.

Oliver Dale considers that the breaking up of blockchains is dangerous for the cryptoeconomy as it leads to the market breakup. When forks create a good product, they take cash away from the “legal” coins.

But, after all, the essence of the “cryptoeconomy” is that there are no “legal” coins. If a currency is completely decentralised, does not have a single emitter and is regulated only by miners, it cannot be “legal” by definition.

Neither Bitcoin, nor any other cryptocurrency will ever become the new dollar — it is time to realize it. Neither the ban on cryptocurrencies, nor the blockchain code errors, forks and hacking actually threaten cryptoeconomy.

  • Firstly, because the cryptoeconomy does not exist per se. Although the word itself is very fashionable.
  • Secondly, what we call the cryptoeconomy will never work by the same laws as the traditional currency market, because the essence of cryptocurrencies is absolutely different.
  • Thirdly, cryptocurrencies are not currencies (pardon the tautology).

Therefore, I think that the cryptoeconomy crash will not happen. All these black swans of Oliver Dale can threaten only one concrete cryptocurrency — Bitcoin. But the Bitcoin crash will not lead to a collapse of the blockchain technology and will not wipe tens of thousands of the existing tokens from the face of the Earth.

Most likely, it will be replaced by another cryptocurrency (or a few). I do not exclude the possibility that a national cryptocurrency which countries will agree to use for international transactions and the struggle against dollar will become one of the cryptocurrencies which will replace Bitcoin. But it has nothing to do with the cryptoeconomy, it’s politics at its purest.

Cryptocurrencies will long be speculated on and people will try to use them to solve problems in very different spheres. It will reflect on our future and will probably drastically change our society and economy. But cryptocurrencies cannot destroy the existing state and financial institutions, just like there will be no crash of the cryptoeconomy and the end of blockchain.

Unless a black swan appears…

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