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BY Risen Jayaseelan - August 13, 2018

Miscellaneous 0

What drives crypto prices?

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The reason why the prices of cryptocurrencies are falling so much in 2018 is due to the lack of adoption.

This view has often been expressed although not often remembered.

Chris Burniske tweeted home the point today.

“Why is crypto falling so much in 2018? Because in 2017, the market was up 30 times, but adoption, beyond investing and trading, was not concurrently up by 30 times,” he said.

Chris Burniske: “Right now the market is sitting at 10 times January 2017 prices but has adoption grown by 10 times since then”

Recall that Burniske is a venture capitalist, author of a book on cryptocurrency investing and known for his formulas on how to value cryptocurrencies.

His view was quickly agreed and retweeted by another popular character in crypto circles namely Vinny Lingham, who said, “That’s what I said before the bubble. Utility drives value, not speculation.”

A gauge on the lack of adoption can be seen on the DappRadar site. It shows that the highest number of users of a blockchain-based game in the last 24 hours was a mere 382. That game is Etheromon. Even the world famous CryptoKitties had a mere 278 users in that period.

Image courtesy of DappRadar website.

Recall also that games are meant to lead the adoption drive for blockchain globally. And yet those usage numbers look appallingly small for now.

An entrepreneur familiar with online gaming points out that these numbers are worryingly small. “Online gaming active users are in the hundreds of thousands for popular games. Looks like blockchain still has a ways to go, both in terms of active users and financial turnover,” he says.  

But Gabby Dizon, the co-founder of Alto, a platform connecting games to the blockchain, explains that this is part of the journey for blockchain.

“Sure, there are user adoption challenges for mainstream adoption to take off and crypto wallet penetration is still very small”.

But Dizon adds that for games and other dApps, there will be a “hybrid of ‘on-chain’ and ‘off-chain’ interaction.”

“The off-chain usage will not be captured by sites like Dapp Radar,” says Dizon, adding, “Some games which might be gaining traction might be using second layer scaling solutions but you won’t see these on Dapp Radar either”.

Gabby Dizon: “Early dApps are more about speculation. Real games have an 18 to 24 month development cycle to build a polished experience”.

Dizon, who had earlier told CryptoNewsAsia that in the near future, gaming will help drive mass adoption and exposure to cryptoassets, is not letting the small adoption numbers for now bother him. Just last week, Alto announced  that it will add support for the Hedera Hashgraph public distributed ledger platform for its blockchain game platform launching later this year.

“Distributed ledger technology will change the way we play games in the future. For the first time, true ownership of game items is possible. We’d like to be on the forefront of this breakthrough,” said Chase Freo, CEO at Alto.io in the press release.

Meanwhile, going back to the data from Dapp Radar, it shows that gambling sites have a bit more traction, with the infamous Fomo3D game of chance hitting a figure of 651 users in the last 24 hours.

“Early dApps are more about speculation. Real games have an 18 to 24 month development cycle to build a polished experience,” says Dizon.

Meanwhile Burniske’s tweets today went on to add this, “Right now the market is sitting at 10 times January 2017 prices. But has adoption grown by 10 times since then?” he questioned.

“We have entered the frenzy, where financial reality will often hyperventilate, as the underlying fundamentals march onwards mostly unperturbed,” he said.

Image courtesy of @cburniske

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