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Bearish Bitcoin Prices A “Do Or Die” Moment, Economist Tyler Cowen Says

Isoe Aera

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Tyler Cowen Bitcoin

Economist Tyler Cowen, a professor at George Mason University has declared that crypto price crash could be beneficial to the market. In an incisive op-ed published in Bloomberg on Nov. 6 2018, Cowen explained that the price crash would set the market up for bigger things in future.

To contextualise the situation facing the nascent crypto industry, Cowen provided a reference to two 19th century events. He succinctly put his argument by saying:

“For context, railroad stocks collapsed after a bubble in the 19th century, but still the railroad continued to transform our world. Internet stocks plunged in the dot-com crash of 2000-2002, but that in turn cleaned out the bad companies and paved the way for the subsequent tech revolution, including the rise of Amazon and Google.”

Cowen states that the history he provided is no a guarantee that crypto will automatically take off. Instead, he clarifies that a price collapse does not herald the end of a technology or its relevance. He then proceeds to explain the problem facing crypto by saying:

“One problem crypto has had is that too many junky ideas were tossed around and then often funded by ICOs (initial coin offerings). That is hardly a surprise, given that the asset class went from basically zero to more than $800 billion value at its peak.”

According to Cowen, the increase in ideas led to many white papers, start-ups, frauds and valuable innovations. Cowen argues that from the standpoint of an insider, telling the good from the bad is quite difficult. Therefore, Cowen believes that for most people, crypto still has a dubious reputation. He concisely provides a consoling statement by saying that “new markets, including valuable ones, are often abused at first.”

Crypto Bear Market Is an Eye Opener

Cowen believes that the bearish market in the cryptocurrency space has initiated more discussions on the protection of investor funds. He authoritatively asserts that a time has come for crypto to morph from being a target of easy money. He says:

“Now the time has come for crypto to go on a diet. No more easy money. No more thoughts about ICOs leading to quick riches. The rhetoric is shifting toward a more cautious or even apologetic tone. The corresponding reality can perhaps be one of greater focus and relevance.”

Crypto Must Solve Problems

Cowen argues that for money to be in crypto, the digital asset must change the world. He emphasises that crypto must solve concrete problems. Giving an example of how crypto innovations have solved problems he narrates that:

“We’re at the point where crypto finally has to prove its social worth. But what might that mean? Imagine using crypto as a medium of micropayments to pay for media on the internet. Or perhaps you’ll use the blockchain to verify your identity, rather than telling some stranger on the phone the last four digits of your Social Security number.”

He then makes a contrasting observation by stating that :

“For all the experimenting and theorizing, however, bitcoin and other crypto assets have yet to really change the world in those ways. Now is the time to make a big push on these and other fronts, because the money won’t be in crypto unless it is helping to solve some concrete problems.”

“Do or Die” For Bitcoin

Expectedly, in his concluding Op-ed remarks, Cowen opines that Bitcoin is facing its “do or die moment. He says

“Think of bitcoin and other crypto-assets as like a company that is finally receiving a cash call. I am modestly optimistic, but it is time to put up or shut up. Let us hope that this “do or die” moment will once again bring out the best in entrepreneurs.”

For a market that has faced a long bearish outlook, especially for Bitcoin, there has been a lot of pessimism. Some commentators have predicted an imminent crypto crash. However, from Cowen’s Op-ed, he is not sounding the alarm yet.

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Isoe Aera is a cryptocurrency and blockchain enthusiast who likes to analyse and write on new developments in the cryptocurrency ecosystem. Being a graduate in Economics, Aera loves to study how cryptography disrupts economies.

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