Ella Zhang, the head of Binance Labs believes there is a cryptocurrency bubble that needs to burst before true blockchain utility can emerge. Zhang recently announced that Binance was investing $1 billion in support of cryptocurrency and blockchain technology startups.
True Utility Will Only Emerge After the Cryptocurrency Bubble Bursts
In a phone interview with Bloomberg, the Binance Labs chief outlined the company’s views on the present state of the market, saying:
We’d like the bubble to break. We still see a lot of hype in the market, valuations are high and unreasonable. We really think if the bubble bursts, it’s a good thing for the industry.
Many cryptocurrency critics say the market is a bubble. Some have even likened it to previous market bubbles like the dot-com bubble of the 90s and the tulipmania of the 17th century. The consensus among the crypto-naysayers is that digital currencies will die-out after a few years.
For the crypto-proponents, many debunk the bubble claims. Even the ones who do say when the bubble bursts, the projects with real utility will emerge and cryptocurrencies will drive the development of the future. They point to the dot-com crash and how it led to the evolution of the modern-day e-commerce space. Zhang’s sentiments seem to support this last opinion. According to the head of Binance Labs, the crypto bull run is good for attracting investors, but it offers no real utility for the market beyond the flow of liquidity.
The Binance Fund and Support for Crypto and Blockchain Startups
Binance recently announced a $1 billion support fund for cryptocurrency and blockchain startups. As head of Binance Labs, the venture incubator for the Binance platform, Zhang is directly in charge of overseeing the support fund. The company is also taking steps to combat the prevalence of fraud in the industry. Binance, the cryptocurrency exchange behemoth plans to launch the Cryptocurrency Governance Initiative (CGI) with the website going live.
Speaking on the initiative, Zhang said:
The main purpose of this is to fight scams and sh*t coins and to boost crypto and blockchain technology.
The head of Binance Labs also said that any project that Binance invests in must vow not to participate in pump and dump schemes. According to Zhang, Binance will closely monitor each project to ensure that they remain in compliance with the provisions of the fund. Any project found violating the terms and conditions will be immediately de-listed and company will cease its collaboration with the erring party.
Record Revenue Earnings for ICOs in 2018
Zhang’s comments on the state of the market bring into sharp focus the Initial Coin Offering (ICO) scene. Despite the decline in the prices of digital currencies, the ICO market continues to grow. 2017 was a breakout year for ICOs with many projects raising hundreds of millions of dollars. The sale of digital tokens by ICOs in 2018 has already far exceeded the record set in 2017. According to figures released by Coinschedule, ICOs have raised about $9.6 billion so far in 2018.
Do you agree with Zhang’s notion that the crypto bubble needs to burst before the industry can indeed begin to flourish? What are your views on Binance’s efforts to support cryptocurrency and blockchain technology startups? Keep the conversation going in the comment section below.
Image courtesy of Shutterstock, LinkedIn (https://www.linkedin.com/in/ella-zhang-992b9817), and Coinschedule.