This is what Mark Cuban thinks is wrong with the crypto industry
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Hint: It’s not the drop in prices that bothers the Cubans.
Important points
- Cuban believes crypto needs to move beyond replication and start innovating.
- The billionaire investor is looking for the next big must-have that even non-crypto fans will want to use.
- For crypto projects to be successful, they need to generate revenue just like any other business.
The cryptocurrency industry has struggled this year, with many cryptos down 80% or 90% from their all-time highs. But that is not what worries the billionaire investor and Hai tank referee Mark Cuban. For him, it is the lack of innovation in crypto that is most worrying.
Imitation is not enough, it will require innovation to drive crypto
Speaking to Altcoin Daily, Cuban said he remains bullish on cryptocurrency. However, he wants to see new ideas and the emergence of the next big thing that will bring a new wave of crypto interest. “We went from DeFi to collectibles, but now what?” he said. “What worries me is that it’s not the next application.”
Cuban says that if you look back at the way crypto evolved over the past few years, it was first the summer of DeFi, followed by NFTs. Each brought in more people, increased interest and new investor money. The problem is that now projects are playing on the edges and imitating previous successes instead of pushing to create something new.
“Instead of seeing real innovation, you see replication,” Cuban said. “It’s not going to be enough to bring people back to crypto.” He compared it to the development of the internet, where streaming, websites and online shopping created a new wave of interest. Then everything went quiet around 2000 and 2001 before social media and app stores started to attract new users again around 2004.
“What’s going to drive crypto beyond just the crypto elements is something where you just have to use it,” he said. “Crypto hasn’t had that moment where your grandma, your little brother, your little sister all have to use it.”
What Mark Cuban looks for in a crypto project
Evaluating cryptocurrency projects can be difficult, but a crucial component is thinking about how the crypto will generate revenue. Just because it is a cryptocurrency does not automatically make it a functioning business. Cuban explains, “The thing about crypto that I think people sometimes don’t realize is that you need users in order for people to buy and use Ethereum (ETH) or whatever.”
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Got started
If we are talking about an ecosystem like Ethereum, it means that you have to see applications that will generate gas fees. “Look at the number of transactions,” says Cuban. “To me, that’s the ringer of success.”
As for play-to-earn, another crypto trend that exploded in 2021, Cuban says there has to be a reason for people to buy tokens outside of the game itself — or another source of income, such as advertising revenue. The crypto guru says that if games to make money don’t have a way to generate revenue outside of tokens, you’re in trouble.
The bottom line
Last year’s crypto frenzy is over, but many crypto enthusiasts like Cuban still see long-term potential for the industry. If you’re considering buying crypto, Cuban’s advice on looking for utility and monetization is valuable. There is much we do not know about how the industry will develop, but if a project cannot sustain itself, it is difficult to see how it will survive in the long term.
Cryptocurrencies are high-risk investments. It is important to only invest money you can afford to lose and ensure that crypto is only a small part of your wider portfolio. Don’t assume that a project will be successful just because it uses the blockchain. It must still function as a business if it is to thrive and generate strong returns.
