Endless Winter or Use Case : Effect of Recession on Crypto

I recently read one of the observation of Paul Krugman in NYP post. His observations were that digital currency needs to come up with some sort of the real world use case. If it fails to reach the mass it would become useless.

This observation is not just limited to decentralized world but also for the centralized world where average crypto illiterate don't know how to use the crypto yet. Which brings us to the point of the use case and the projects where blockchains are used.

What does it mean by Endless Winter?

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Each year we have new blockchain projects. And fact be told, they fail to deliver. And that is something we see common with many projects which includes LUNA, Cardano, Polkadot and many others. These projects continue to eat the fundings from 3rd party, govt and many other venture capital firms.

Endless winter happens when the market suddenly loses the trust in some investment. And then gaining one invstor after another becomes a chore so much so that many projects give up. This happens in many investments which also included the oil in some parts in the world.

How does it apply to crypto?

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Endless winter is a chance that may happen with crypto due to many reasons. The most common reason is the adoption and the financial recession. So let's talk about the adoption first. If you see the blockchain and the crypto has been included in the education sector but there is a gap between the old and young for this tech.

Another thing is that majority of people are invested into asset other than crypto. Which means by the time financial world recovers, a lot of money is being burned in the crypto. And also there would be even more lack of trust for the crypto if investments are not regularly poured into the market.

How does Use case saves blockchain?

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Ethereum is behind many games, metaverses and NFTs. And each of the digital assets in the web3 are being deployed in it. Nobody knows behind the scene there is Ethereum. Unless you are buying it in ETH or polygon, nobody finds out.

Which means each blockchain project comes out in the market needs to think of a use case. More use case the more chance for demand of that blockchain. Take case of Hive we have content, video, audio and even game. That's what makes the value of the chain in the process.

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We don't know when it the endless winter ending. We do know that recession is going to make us choose a lot of our portfolio items carefully. And the HODL would die unless we see the market back in action before 2024 arrives.

What's your opinion?

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