The Crypto Winter Is Here and We Only Have Ourselves to Blame

One thing has always infuriated me: his boasts, especially last year, that he was spreading belief in bitcoin because the small amount he'd distributed to random people over the years was now worth X times more in dollar terms.

Implicitly, the story my friend told to these people was not that, as a model for censorship-resistant, disintermediated money, bitcoin has the potential to enable peer-to-peer exchange without rent-seeking financial institutions dictating the terms.

The underlying message was not that bitcoin is the first digital asset, a representation of value that can live on the Internet without risk of replication or counterfeiting.

Last year, as an insane market bubble, not only in bitcoin but also in countless other crypto assets, fostered a collective mania around the world, the "To the moon" language and "When Lambo?" mindset permeated everything.

I'll never forget a relative who'd paid no attention to crypto beforehand asking me what coin she should buy.

For a community that likes to declare that you can trust crypto because, unlike fiat money, it's backed, not by wishy-washy people, but by rock-solid math, this encouragement of magical thinking was pretty hypocritical.

It's not irreparable, but it's fair to say we have a problem when the mainstream now equates crypto with bubbles, scams and losses.

The blow to confidence is so great that I now regret writing last year that the surge of mainstream interest in crypto was constructive.

Bitcoin is now down roughly 75% from its highs, ether is off about 90% and the overall token market capitalization is 80% lower.

For crypto startups, this will further exclude them from markets, make it even harder to get bank accounts and impose even greater compliance burdens on them.