Crypto Winter, The Binance Hack, And The Media’s Role In Driving Mainstream Adoption
By Decrypt on ALTCOIN MAGAZINE
By Martyna Borys & Elvina Soogun
At the beginning of this year, investors, fanatics, critics and the media couldn’t get enough of the ‘crypto winter’ metaphor. At the time, Bitcoin had dropped more than 80% in value and around £315 billion has been wiped from the cryptocurrency market within a year. Overall, things were looking pretty bleak. Funding was drying up, layoffs were rife and, in some instances, companies have withdrawn from the market altogether.
Interestingly, in January, CoinDesk surveyed 66 crypto startups to unpack the true impact of the bear market. Of the 45 startups that responded, 40 of them reported a positive prognosis for the coming year. Now that we’re halfway through what has been a rather eventful year, let’s take a look at whether 2019 is turning out to be a year of loss or opportunity. Spoiler alert: we think it’s the latter. Here’s why:
Binance Hack And Media Landscape
The cryptocurrency market is still a very new area and so the media are so quick to jump to conclusions. At worst, these can be incredibly damaging; at best, incredibly confusing for those who’re trying to make sense of it all.
Let’s take the Binance hack as an example. When Binance was hacked earlier this month, there was a stream of media coverage ready to cite this as the latest fallen pillar in the decline of cryptocurrency. Why? Well, while the industry is on a mission to prove itself as credible, trustworthy and a save space for investors, the Binance hack marked the sixth largest in crypto history — not ideal. As soon as the negative headlines began to take over, we expected to see all the charts turning red again and for God knows how long. As predicted, the most popular crypto assets fell around 3% within the hour of the announcement. However, it bounced back relatively quickly. This time around, the price shot back up and was trading at a higher mark than it has in nearly a year.
So how has the market managed to weather this storm? One that would have otherwise triggered falling prices and a wave of unyielding skepticism from commentators. These might be the reasons:
- The sterling communications from Binance’s CEO Changpeng Zhao and his team
- The fact that no users were affected by the hack — the lost funds were covered by the Secure Asset Fund for Users (SAFU)
- The cryptocurrency market has matured and is more stable in the face of outside market influence
Crypto And The Media; An Uneasy Symbiosis
The myriad headlines around failed ICOs, endless (and useless) stablecoins, as well as poorly managed cryptocurrency exchanges, cast a bad light on the industry as a whole. It’s no secret that when the media reports on the crypto project being a major failure — the market reacts accordingly.
But there’s also a reverse scenario for this. While the market moves ‘aggressively’, the media are quick to look for people/companies to blame. There are stories, that according to many, helped to drive the BTC price down; Mt Gox’s massive sell-off; China’s blocking of access to cryptocurrency exchange desks; BTC futures expiration….
There’s, of course, a lot to be learned from these news stories that might have accompanied Bitcoin’s losses. On the other hand, to what extent have these events, and the reporting of them, contributed to the downturn? The mainstream media might not be the best advocates here. Instead of getting caught up in suggestive and leading headlines, investors should be seeking insights from industry experts and market analysts. They can help define whether the price drop was influenced by external factors or whether it was a market correction which was due to happen.
The media have an important role to play in shedding light on the issues of the day and encouraging healthy, honest and open debate. The Binance hack was a costly lesson for the company. It was a wake-up call for CIOs that there are exploits available to attackers even in the presence of highly secure core algorithms like those used in blockchain technology. But it also serves as an important proof point that cryptocurrency is developing a ‘thicker skin’. Perhaps, these stories are underreported or not followed through?
Bitcoin Capabilities And Adoption
Despite everything, bitcoin has more than doubled in price this year and is now one of the best-performing assets in 2019. As rightly predicted by the crypto start-ups, CoinDesk surveyed at the start of the year, the future looks bright as we’re reaching mainstream adoption across the globe. Buying a coffee in Starbucks using BTC is just the beginning. Here’s a couple of other things to be aware of:
- Facebook plans to launch ‘GlobalCoin’ currency in 2020
- Fidelity announced earlier this month that it’s offering Bitcoin trading to its institutional clients in a few weeks
- AT&T becomes the first big mobile carrier to accept Bitcoin payments
Is this just temporary? We can’t be sure but, according to Forbes’ associate publisher, Charles Morgan: ‘We’ve never seen anything quite like the situation with crypto assets and blockchain technology right now. The only parallel that comes close is what happened in the 1990s with the mass adoption of the internet.’
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Or you can also drop us a line on decryptblog@gmail.com, for more specific Fintech PR requests. We’re always keen to connect and meet with people that share our passion for the blockchain & crypto space.
