Joseph Lubin, co-founder of Ethereum, believes the massive price surge experienced by the cryptocurrency market in late December was ultimately a good thing for the space.
As governments around the world ask what should be done about the inherent volatility of most cryptocurrencies, Ethereum co-founder Joseph Lubin says that it is not necessarily a bad thing.
In an interview for Cheddar at the South By Southwest 2018 conference, he was asked whether the recent spikes in cryptocurrency prices and the subsequent swings were good or bad things for the space. Without explicitly mentioning volatility, he responded:
“It’s a great thing for our space. It drew entrepreneurs and technologists, security auditors, and value and money into our ecosystem.”
His summary of the volatility in the cryptocurrency market centered on human nature and emotion, suggesting that people had a strong FOMO response towards December. This was followed by an equally strong price correction, leaving behind those who cling to their investments.
“When people see that, the general fear-greed dynamics of humans starts to kick in and we tend to overshoot price and oscillate for a while until we settle at a reasonable price for any point in time,” he said.
In an interview we did recently with Simon Grunfeld, the founder of Ibinex, he spoke more about the lack of trading volume that Bitcoin has in comparison with mainstream fiat currencies.
“…On a foreign exchange you’re talking about a 5 trillion dollar daily turnover. Cryptos are nowhere near that at this point. So, in order to see the smooth trends, relatively speaking, from a daily perspective or weekend perspective, you just need to have a lot more volume,” he told us at the Finance Magnates 2017 London summit.
Perhaps both points of view crystallize into a broader picture that encompasses some of the reasons for the outrageous price swings that cryptocurrencies experienced, as well as their day-to-day fluctuations.
It’s not a given that volatility in cryptocurrencies is necessarily a bad thing, but whatever it is, it will certainly remain part and parcel of participating in a market that doesn’t boast the same trading volumes as fiat currencies to act as a ballast.
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