I often hear crypto enthusiasts tell how blockchain and cryptocurrencies are creating all these new fascinating industries. And, I agree, many of these industries could radically change our world. I am seeing some really interesting stuff going on in decentralised finance, gaming, and technologies for intellectual property rights (like NFTs).
But one argument that really annoys me, is that crypotcurrencies have created an entire new industry in trading. Cryptotrading is being touted as an industry in itself.
The purpose of crypto trading markets should not be to make a quick buck
Trading cryptocurrencies has become a multi-billion dollar industry. Most large crypto exchanges have even created their own tokens. But I really don’t see the point of trading for the sake of trading.
My problem is that I feel that 80-90% of daily transactions on exchanges are pure speculation. Its people trying to make a quick buck. Most of these people troll twitter and reddit threads to look for the next hot token.
At the time of writing this article, Bitcoin is priced at $48K and according to CoinMarketCap we’ve got about 90 altcoins worth over a billion dollars in market cap. Seriously? 90 blockchain technologies worth over a billion? Most of these organizations have never sold a damn thing!
If the purpose of trading on crypto exchanges is to trade for the sake of trading, then we are no different to the people on Wall Street. We will end up becoming part of the financial establishment, pretending that trading equities is a real job.
We have all seen the yuppie stockbroker types as portrayed in movies like Wall Street or in Michael Lewis’ Liars’ poker.
How exactly are people that trade crypto for a living different? Please don’t get me wrong, I am a free market loving capitalist guy. But I also believe that whatever we are selling, we should be providing value to society. And trading for the sake of trading does not provide value.
What the real purpose of a Crypto Trading market should be
Trading markets exist so that new projects can get financed. In blockchain, this technology is revolutionary. In the past if you wanted to invest in a startup, the best projects were reserved for angel investors and venture capitalists.
The beauty with crypto markets is that anyone can sign up to an exchange and start buying and selling altcoins. If I have a great idea, I can ask people to finance it.
If my friend asks me to back his project, I can go ahead and do it without needing to sign complex contracts and shareholder agreements.
This is where our focus should be. Not peddling the latest shitcoins.