Bitcoin is down over 7% in the last 24 hours in yet another week of heavy losses, and billionaire investor Mark Cuban says the pain might only be getting started for crypto markets.
The Shark Tank star tells his 8.6 million Twitter followers that crypto is going through the same phase that the internet did in the early 2000s when countless startups with little to no utility got in over their heads.
According to Cuban, the crypto industry, in particular smart contract platforms, needs to start focusing on how to improve business models in order to justify some of its big valuations.
“Crypto is going through the lull that the internet went through. After the initial surge of exciting apps, NFTs, DeFi, P2E (play-to-earn), we saw the imitation phase as chains subsidized the movement of those apps to their chains (ala bandwidth and storage subsidies by startups in the 2000s)
What we have not seen is the use of smart contracts to improve business productivity and profitability. That will have to be the next driver. When businesses can use smart contracts to gain a competitive advantage, they will. The chains that realize this will survive.”
The Dallas Mavericks owner says that the digital asset ecosystem has gotten crowded, with too many projects giving the same sales pitch as everything else. Cuban thinks copycats without unique utility and product market fit will ultimately die off as the hype fades.
“The chains that copy what everyone else has, will fail. We don’t need NFTs or DeFi on every chain. We don’t need bridges to move NFTs between chains (does this make it fungible?). We need smart contract apps replacing [software as a service] apps.”
When it comes to utility, Cuban has been vocally bullish on Ethereum, as well as platform Polygon (MATIC), its biggest scaling solution. The veteran entrepreneur says smart contract ecosystems like Ethereum are where the real upside opportunities lie.
“There’s the tokens that have utility like Ethereum. They have these things called smart contracts and they allow you to trade different things, whether it’s NFTs [non-fungible tokens], insurance contracts on Ethereum, there’s just a variety of things.
NFTs are one version of the applications, and we’re starting to see others [like] textbooks turned into NFTS. Music, songs, movies turned into NFTs. Anything digital can use a smart contract to become an NFT.
That’s where the real upside is.”
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