The only guarantee offered by cryptocurrency investing is volatility. Revolutionizing modern currency is going to take time — and for good reason.
Markets are unpredictable and unreliable but also an indicator of change. Crashes mean things are changing, even maturing.
Crashes are unavoidable. The truth is: They are necessary.
The ebb and flow of the markets are proof of concept that there is an unprecedented, global initiative for decentralized currencies and applications.
In order to sustain the current and future influx of ideas and new coins, it is imperative that the markets not only stabilize but are able to prove long-term viability.
For that to happen, steep learning curves must be navigated. Regulations must normalize for standard implementations worldwide. Meantime, investors must recognize and account for the inevitability of periodic market crashes.
In fact, crashes in time prove to be blessings in disguise, if the appropriate measures are accounted for.
Whether the crash of 1929 or the 2008 financial crisis, America is no stranger to destabilization. So much so that American economist Hyman Minsky spent his career proving his theories of just that — stability is destabilizing.
Risk at scale
What this means is that stability itself eventually destabilizes any market. If no volatility existed and cryptocurrencies went up by 10% every year, investors would pay more until they were expensive enough to return less than 10%.
The evolution of cryptocurrency is largely dependent on how it is navigated — what goes up must come down.
As Forbes contributor Robert C. Wolcott puts it, “Innovation at scale assumes risk at scale.”
To revolutionize takes guts, especially when it comes to creating entirely new forms of economic exchange.
The cryptocurrency markets have a responsibility to crash, to settle the debris of uncertainty and create stable ground for the next crypto-generations to build from.
Proof of concept comes in many forms. The introduction of initial coin offerings (ICOs) is a testament to this, regardless of outcome. The average return of a blind investment out of 204 offerings, according to VC Mangrove Capital, was 1,320%.
Investing strategically to accommodate the inevitable shifts will not only help stabilize the markets as a whole, but is the closest thing to a guarantee return on your investments that cryptocurrency has to offer — except for the potential to capitalize on its volatility.