(Kitco News) - This isn't the first Crypto Winter, nor will it last forever, according to Sean Mackay, CEO of CoinPayments, who cited several events that could lift the cryptocurrency space out of this current bear cycle.
"Right now, a lot of the macro conditions are kind of affecting crypto as well. Crypto is always correlated with tech stocks and the high-risk side of things. To get us out of here, we're looking at a couple of things. One, is some kind of new narrative, innovation in the space, which is great because Crypto Winters are typically the time when devs really get to work and the projects really put their heads down and focus," Mackay told David Lin, Anchor for Kitco News at the Future Blockchain Summit in Dubai.
Additionally, the next Bitcoin halving in 2024 may help the market, Mackay noted.
Several of the macroeconomic forces that are driving a bear market today, including high inflation, monetary tightening, and geopolitical turmoil in Eastern Europe, were not prevalent in 2018, the last Crypto Winter.
"A lot of that was due to the ICOs that launched, 99% of those probably failed and all that money that they raised from retail, millions, hundreds of millions on some ICOs, just gone. What brought us out of that [Crypto Winter] was innovation in the space, change in the narrative in the media with all these new announcements and innovations, like some really popular DeFi platforms to lend with, to trade with. We had NFTs…also it coincided with the halving back in 2020, so that's typically around the time that brings up new headlines, [and] reignites knowledge in the media," Mackay said.
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Bitcoin as a Medium of Exchange
While countries like El Salvador and the Central African Republic have adopted Bitcoin as legal tender, but there are still many obstacles that Bitcoin needs to overcome for it to become a widely adopted medium of exchange.
"There's a lot of work that's going to be needed. The way that crypto payments work is a little bit different than a credit card transaction," Mackay said.
Importantly, Bitcoin's blockchain technology is still too slow and costly to process transactions efficiently, without the help of Layer 2 protocols like the Lightning Network.
"Where it stands right now, the general practice is to wait for two blocks to pass before you consider the transaction confirmed, settled, and unchangeable. You can always create another block and then get a double spend in there, so typically to prevent any double spending, you wait for two blocks to pass on the chain. On average, they're passing blocks on the Bitcoin blockchain every 10 minutes, so you can imagine waiting in line for a coffee, paying for a Bitcoin, you're going to wait 20 minutes for that payment to be confirmed, it's just not reasonable at the moment. Not to mention the fees that are involved with sending Bitcoin as well. Those are kind of the two hindrances," he said.
For more information on CoinPayments, watch the video above.
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