Will the crypto crash derail the next web revolution?

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Richard Waters and Hannah Murphy in San Francisco and Scott Chipolina in London JULY 5 2022

Ethan Buchman, co-founder of blockchain network Cosmos, is doing his best to sound stoic. Since January, the collapse in cryptocurrency prices has wiped 80 per cent off the value of the atom tokens that underpin Cosmos, slicing $10bn from their total worth. “Some people get shaken out, some people get scared,” Buchman says of the price collapse in the tokens, which are used to secure the network. “But others see it as an opportunity to double down on what they believe in.” “It is always a scary moment for everybody [when markets crash],” adds Joseph Lau, co-founder of another blockchain company, Alchemy. He insists that the falling crypto prices don’t mean that all the projects involved are doomed, or that developers working on them will lose interest. The fall in prices doesn’t mean crypto projects will not get “traction in the long term”, says Lau. The people working on them “are building no matter what the prices are”. But if Lau and Buchman are wrong, the crypto revolution could be stopped in its tracks. This year’s market collapse — part of a broader retreat from risky financial assets in the face of rising interest rates — could seriously weaken the incentives that have made crypto one of the hottest corners of the tech world. No two tech manias are exactly alike. But the market collapse and the claims that it will not derail the crypto revolution recall another seminal moment in recent tech history: the dotcom boom and bust at the turn of the century. Both bubbles were sparked by a supposedly revolutionary technology that would weaken control over online activity by the political and business establishment, ushering in a decentralised online world in which power would flow to the people. In crypto’s case, something that began as a vision of digital money around bitcoin has broadened into a movement known as Web3. It holds that the same underlying blockchain technology, which records and tracks crypto assets, will support a new generation of user-controlled online services that will dethrone today’s internet giants.

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