The volatility is one of the main reasons against it. Critics doubled down on this point after the downturn. The argument misses an important insight about the differences between traditional and digital finance. While different coins are meant to serve different functions, today they all more or less act as startup equity, treated as commodities, currency, store of value, and incentives for the validators that make a project function. Unlike traditional equity, there is a lot of price discovery at the beginning of the asset. It means that the markets are more sensitive to signals. The overlooked feature of this, however, is that price swings communicate important information to founders and investors.
The past few months have been a rough time for the industry. Between April and June, the value of the digital currency halved, from just over $45,000 to around $20,000. $60 billion worth of value was wiped out by the collapse of the Terra-UST platform in May. There have been layoffs at established companies.
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