The cyclical law of the Blockchain industry: from bubble to value, Bear Market breeds giant projects

Emerging industries often follow a cyclical pattern: from rise to fall, then back to rise, and this cycle tends to repeat at least three times until reaching the peak stage.

Research shows that the rise of things typically goes through three stages: undervaluation, value discovery, and bubble. The internet industry has gone through these three stages, and the current blockchain technology is in a similar bubble stage, resembling the early development of the internet.

Looking back to the early 1980s, few could have predicted the extent of our reliance on computers and the internet today. At that time, mainstream media generally viewed these technologies as mere toys, scoffing at them. Similarly, in the 1990s, Microsoft's stock was considered by many to have reached a growth plateau. However, it turned out that these views were mistaken, as Microsoft's stock price has increased a hundredfold compared to that time.

Undoubtedly, Bitcoin is the cornerstone of the entire blockchain industry. When it comes to blockchain, it is always inseparable from Bitcoin. Bitcoin has a history of 11 years, having experienced everything from the dark web to hackers, then to regulation, and later the controversial fork events.

The price fluctuations of Bitcoin have always tugged at the nerves of cryptocurrency investors, especially those shocking falls. While technological advancements are often slow, the myth of getting rich quickly continues to attract numerous investors. In such a market environment, two distinctly different types of projects have emerged in the blockchain space:

First-class projects are often known for their dramatic price rises in a short period. These projects typically depict a grandiose application scenario that is actually riddled with flaws. Their white papers are often lengthy but rarely address the specific implementation of the project, instead discussing prices, promotion, and fund allocation at length. They frequently tout "decentralization" prominently on their websites. A common tactic employed by these projects is to pull investors into groups and attract attention through frequent calls for buying. When the investment frenzy subsides, project parties often quietly exit or leave behind automated response bots. Nevertheless, many investors remain keen on such projects, hoping to achieve high returns.

In contrast, another category of projects may perform mediocrely during a bear market. These projects may occasionally attract attention, but the team remains focused on real work, with updates to the GitHub repository every day, even though the coin price may stagnate for a long time or show little increase. While there are investors in the community who express dissatisfaction with the coin price, there are always some loyal supporters and team members who work tirelessly for technological development.

Such projects are often not keen on participating in high-profile summits or large-scale promotional activities. Instead of roadshows or press releases, they prefer to concentrate their limited resources on the most critical tasks, which is to promote the widespread application of blockchain technology. The key to achieving this goal lies in in-depth technical research and development; only in this way can blockchain truly integrate into daily life, rather than remaining in the realm of castles in the air.

Observing these two types of blockchain projects, we can find that their performance in a bear market is vastly different. In a bear market environment, the speculative tactics adopted by certain project parties are astonishing, while some Ponzi schemes and model coins unexpectedly attract investors' attention. Frankly speaking, these phenomena may just be products of the current bottleneck period in the cryptocurrency market. When market funds have nowhere to go, raising prices for inferior projects seems to be the only thing to do.

There is an ancient truth in the investment field: "Prices fluctuate around value." When true value is created, price is no longer the only measure. Of course, bull markets do indeed make it easier to create opportunities for wealth appreciation. Looking at the price history of Bitcoin and blockchain, the best investment opportunities often arise during bear markets. This is like a common understanding: buy groceries when prices are low. Bear markets are fertile ground for nurturing major projects, such as Ethereum, Zcash, NEO, which were the hottest projects in 2017 and were all born during the bear market of 2015.

The development of history is always forward, both ruthless and extremely fair. The once hottest projects may have lost their former glory. For example, Ethereum is facing challenges with network congestion; the proof of work (PoW) consensus mechanism that Bitcoin has been using is questioned due to decentralization and energy consumption issues; whether Zcash's zero-knowledge proof technology can truly be realized is still to be verified.

Fortunately, there is always a group of people in this world who are not satisfied with the status quo and are not limited to the present. From the rise of the Mimblewimble protocol, to the widespread promotion of cross-chain technology, and later the proposed "proof of capacity (PoC) consensus mechanism where everyone can mine." We can see that as blockchain technology becomes recognized by more and more people, and with continuous technological advancements, the blockchain field not only has Bitcoin, but also many obscure project teams contributing to the development of this industry.