The crypto market is not doing well at the moment. The prices of almost all cryptocurrencies are very deep under water and possibly this wasn’t even the bottom. However, those who survive this difficult period can, according to deputy governor of the Bank of England, Jon Cunliffe, are rising as the new ‘Amazons and eBays’ of the world.
The Dot-com bubble
Cunliffe compares the current crash to the bursting of the Dot-com bubble in the late 1990s, that reports Bloomberg† At the time, the internet bubble completely collapsed and more than $5 trillion in value was lost. At the time, however, that didn’t mean the end of an industry at all. It was precisely the period when companies such as Amazon took the first steps towards great success.
Yes, a lot of crypto companies will go under during this crypto winter. Some analysts even expect that two-thirds of all crypto hedge funds will perish. However, according to Jon Cunliffe, like the dot-com bubble, the technology will not disappear.
“The analogy for me is the Dot-com boom, when $5 trillion was wiped out of value. A lot of companies went under, but the technology didn’t go away. The ones that survived, the Amazons and the eBays, turned out to be the dominant players,” he said.
The crypto industry has the potential to rise in the same way. According to Cunliffe, the crypto sector has the potential to completely change the current financial system by using revolutionary technology†
Bank of England on crypto
Cunliffe also spoke briefly about the UK central bank’s stance on the crypto industry. According to him, the bank is currently mainly engaged in stablecoins and central bank digital currencies (CBDC). The bank has been scrutinizing how it should implement a CBDC for over a year.
“The question is, are you better off with private stablecoins to be more optimized in certain areas, then linking them back to a central bank ledger somehow? Or should we supply the base?” said Cunliffe.