The cycles of boom and bust seem a little more pronounced with blockchain-based tokens compared to traditional finance. Volatility aside, a pattern of Crypto Winters into massively profitable bull runs is cyclical and occurs every few years.
Cynics love it when cryptocurrencies take a nosedive as it ‘confirms’ all their deeply held suspicions. But for those working in the space, this is just the cost of doing business in a nascent technological frontier which, make no mistake, is still very much in its infancy.
Of course every project wants to make money. However, if a company working with blockchain needs to turn a profit in the short-term they might not survive for very long. Key here is understanding that this is a maturing industry which can bring great rewards, just on a multi-year timescale.
Moving away from the hype of tokens-on-steroids pumping to insane prices can actually be a good thing. A project can focus on building and shipping the best product or service possible, without intense pressure from stakeholders to take continuous action to preserve the sanctity of the token price: retail investors tend to only care about this one aspect.
Removed from the glare of profit-hungry investors, there are incredibly smart people out there building chains, protocols and dApps among other things with a view to seize a future market share for the numerous use cases of blockchain.
A decade in this industry will tell you everything about the cyclical nature of top cryptocurrencies. The technology is solid and that’s what these teams are focusing on, not whether they can pump their token and make a quick buck.
Many startups failed in the Dot Com boom. Most of them in fact. Almost everyone involved had a feeling this would be the next big revolution, and indeed it was. Entrepreneurs with a taste for the unknown would put everything on the line to secure their place in the annals of history.
Although it didn’t work out of the majority, those new companies that survived did remarkably well: case in point, Amazon.
The rush to secure a market share before the technology really takes off is the way to operate because the first mover’s advantage can be absolutely crucial.
Short-term profitability is not the indicator many think it is. Building a great project for the future without concerns about turning a net profit in the first few years may well be the strategy which yields the most success.