After a large dip occurred in the cryptocurrency market this week, a former chief executive and co-founder of Ethereum has expressed his belief that the market will strengthen again, just as soon as Bitcoin alternatives that lack anything substantial are all removed from the picture.
Charles Hoskinson has explained, “My personal opinion is that we’re going to see a consolidation after a crash.” Hoskinson currently runs the blockchain research firm, IOHK, but he used to be in charge of Ethereum, which develops the technology behind the digital currency, Ether.
Many altcoins, such as Cardano, a cryptocurrency handled by Hoskinson’s company, have risen in value substantially in recent weeks while investors search for different digital tokens other than Bitcoin. As an example, Ripple’s XRP, bumped Ether down when it hit second place last month.
The technology that drives cryptocurrencies, called blockchain, documents all digital currency transactions through a dispersed network, rather than one centralized server. Each cryptocurrency is running with a different blockchain and is designed with a different purpose in mind.
However, differentiating between practical and well-designed digital money that could last in society, versus a goofy one that has no likelihood of sticking around is often difficult, what with all the people trying to get rich off the next big coin. A huge amount of lesser-known cryptocurrencies have skyrocketed to much higher values throughout the last month, shooting the total market capitalization of all digital money to three quarters of a trillion dollars.
Hoskinson has expressed concern about “unrealistic” cryptocurrency projects entering the crypto world, saying, “What’s going to occur is a lot of these ventures that don’t have strong fundamentals, don’t have good tech, or just unrealistic projects, they will eventually run into some major wall they can’t quite overcome. They will fracture up and you will see a lot of them are certain to fail.”
This doesn’t mean that all of these kinds of cryptocurrency projects will collapse in the near future though. They have plenty of funding to sustain themselves for a while. Many of these companies have a lot of money to play with.
“The problem is a lot of them have a lot of money,” Hoskinson shares. “It’s really hard to fail when your burn rate is $5 million or $10 million a year, and you have $1 billion of capital.”
According to information shared on Coinmarketcap earlier this week, both Dogecoin, a meme-inspired cryptocurrency, and Dentacoin, a digital currency made specifically for the dental industry, both briefly hit the $2 billion mark in market capitalization, before dropping down a bit.
The founder of Dogecoin, Jackson Palmer, expressed concern about the spike in the coin’s value, stating, “I have a lot of faith in the Dogecoin Core development team to keep the software stable and secure, but I think it says a lot about the state of the cryptocurrency space in general that a currency with a dog on it which hasn’t released a software update in over two years has $1 billion market.”