Meltem Demirors, the chief strategy officer of crypto treasury management firm CoinShares, recently stated in an interview with CNBC that the “narrative around bitcoin is still really hard to grasp.” She added that the larger crypto community was also “really struggling with narrative right now.”
The Rice University graduate explained that the “only metric we have currently for most cryptocurrencies is the price” and it’s an “imperfect” metric. This, according to Demirors, is one of the major challenges the crypto market is facing right now, because digital assets must have legitimate and practical use cases.
Paradigm Shifting Technologies “Take A Long Time To Understand”
Demirors further noted that “new technologies [which] shift the paradigm take a long time to really understand.” She then gave examples of how the technologies and infrastructure developed by giant tech companies such as Amazon, Microsoft, and Intel took at least a decade to mature and gain mass adoption.
In Amazon’s case, it took the company “nine years to recover its value” while Intel’s brand took 15 years, the CoinShares executive stated. With crypto, Demirors said “[there was] this massive run up where everyone got FOMO (fear of missing out)”, which created a “speculative bubble”.
Now though, most of the capital that is entering the evolving crypto industry is being used to develop “real businesses that serve a real purpose”, according to Demirors. However, she added that it will take time for cryptocurrencies and blockchain technology to become really useful in real world scenarios.
At present, the good news is that “we’re starting to see real traction” in crypto and the important thing is “finding those data points” or metrics, the blockchain professional stated. Per Demirors’, sensible investors are looking for opportunities where they see real growth, and they would likely invest in crypto-related businesses if they believe that they can deliver a legitimate product.
“Penetration Rate” Of Addressable Market, Utilization
When questioned about what other metrics for crypto, other than price, investors can look at, the experienced early-stage investor stated that there are two “startup metrics” to consider. These include the “penetration rate [of the] total addressable market” and utilization.
So with Bitcoin (BTC), if it is going to be used as a store of value, the total addressable market is “theoretically huge”, according to Demirors. But she also asked just “how much of that market have we captured?” Currently, it may not be possible to tap much of Bitcoin’s (BTC) addressable market due to its scalability problem and the regulatory uncertainty surrounding it and other cryptos.
The CoinShares strategy officer then talked about what Ethereum’s total addressable market might be, which she thinks depends on its “compute capacity.” As covered by CryptoGlobe, decentralized applications that are built on the Ethereum network, or other crypto platforms such as NEO and Qtum, are generally too slow due to their limited processing capacity.
Going on to discuss the utilization of cryptos, the second key metric Demirors mentioned, she brought up the question of “what are the number of people who are using these [crypto] assets on a day-to-day basis?”
Digital currencies are being used in various ways such as for speculative investing and “specific utility”, Demirors said. Notably, as many other crypto experts have also said, the CoinShares executive argued that:
“A lot of this technology is really immature, it’s hard to use, apps are really clunky, and so we’re not seeing those numbers today.”
“Interesting Milestone” For Ethereum
Commenting on Ether’s recent drop below the $300 mark, Demirors noted that those who invested in the token a year ago will be at a break-even point right now, meaning that they neither made money on their investment nor lost it since its trading at about the same price as it was last year in August. This, Demirors said was an “interesting milestone” for Ethereum.
The CoinShares strategist then noted that all the blockchain startups which raised funds through initial coin offerings (ICOs) have done so by mostly using Ether (ETH) and Bitcoin (BTC). So, many crypto startups who currently hold large amounts of Ether in their treasuries may have lost a large chunk of their capital, after its price dropped from a high of $1200 to presently below $300.
Elaborating on her expertise, Demirors said she helps crypto firms with their treasury management by showing them how to “maintain, preserve, and extend their capital runway.” She added that the present crypto ecosystem is “really struggling” with acquiring and preserving capital, so part of her role is to help firms “allocate out of ETH and into other assets that preserve value long term.”