According to a study from CoinMarketCap, in May 2022, the crypto market fell by more than $800 billion. The reputation of cryptocurrencies and their economies have been hit hard because of the fall of the most famous crypto in the world, Bitcoin. On May the 12th, BTC’s value fell to $26,600. In early August, its value dropped to $23,300. Simultaneously, Ethereum cryptocurrency, BTC’s main competitor, also lost almost 40% in value from April. So, what is going on in the cryptocurrency market, and why? Is it doomed to total collapse, and will it rise again from the ashes?

Why are cryptocurrencies falling in value?

Although the world talks about BTC and Ethereum, all cryptocurrencies are experiencing a crisis. It is because Bitcoin sets the trends in the crypto market and is considered the “gold standard” against other coins. Therefore, if bitcoin falls, other currencies fall too. Why is this the case?

Recently, bitcoin has become much “closer” to the US dollar and is affected by the Federal Reserve’s monetary policy. Due to coronavirus, when regulators were forced to relax conditions for creating and distributing cryptocurrencies, the crypto market became fertile ground to grow old and new projects. However, after the pandemic passed, the Fed tightened regulations once again. As a result, it is not surprising that the crypto market has been falling.

What do the experts say?

According to Alex Reinhardt, a crypto expert and founder of the PLC Ultima coin, cryptocurrencies have fallen due to rising interest rates, worldwide inflation, and the strengthening of the US dollar, which once again “suppressed” alternative currencies. The pessimistic forecasts experts started making about cryptocurrencies also undermined the community’s faith in them, which often drives the development of certain coins. It is why cryptocurrency differs from other assets such as bonds, stocks, real estate, etc., which are considered independent of external factors. However, as Alex Reinhardt points out when the world is going through an economic crisis, a social crisis begins, which unsurprisingly increases the existing risks of all current financial instruments.

Another reason is people’s irresponsible attitude towards participating in the crypto market. Many perceive coins as “luxury items” like artwork, gold, or jewelry, buying them for the long-term as a way to save money and protect it from inflation. However, cryptocurrency has no physical value, although it is a financial instrument. When you have not used your lawn mower for a long time, it starts to rust – the same happens with coins, which have no practical use in real life.

Approaching cryptocurrency as something of real value is ineffective. Users create the value of any cryptocurrency. They decide how to use it, whether to believe in it or promote it. Therefore, no community equals no coin. This begs the question:

Is there a chance of recovery in the crypto market?

Technically, there are no signs of this trend reversing currently. According to the CEO of Bitnalog, we cannot expect positive changes in the market until at least early autumn. BTC will rapidly rise again if the US Federal Reserve changes its policy on financial instruments (including the stock market) and returns to easing conditions. However, inflation must first be resolved for the world economy to stabilize. A lot also depends on geopolitics and the US elections in November.

Alex Reinhardt is more optimistic about cryptocurrencies. Only the small players are leaving the market, while big investors, who are used to playing the “long” game, remain. They will probably raise the market from its knees because experienced investors increase capital, including technical capital, during a recession. For example, mining equipment has also fallen in value because of the depreciation of bitcoin. So, this is not just about a “collapse” of the crypto market but a reset, when investors realize their responsibility for project development and then when relations with regulators, which are still controversial and problematic, finally stabilize.

Also, remember there are still exclusionary coins, which successfully stay afloat even in a crisis. For example, PLC Ultima, thanks to its developed ecosystem, provides its users countless opportunities to use PLCU in real life. For example, investing in projects on a crowdfunding blockchain platform, earning passive income, or purchasing goods with PLCU and other cryptocurrencies across Europe using the marketplace. Furthermore, as mentioned above, the community shapes the value of cryptocurrencies, so those coins used daily in different countries worldwide are guaranteed to survive and rise over time.

Web3 has developed a rather negative name for itself in the arena of sustainability and protecting the planet. That’s thanks in large part due to chains like Ethereum and Bitcoin which consume massive amounts of energy for their protocols. But a recent research report has shown that one of the greenest networks out there is TRON.

The CCRI, or Crypto Carbon Ratings Institute is responsible for auditing networks to identify and measure their energy efficiency and carbon footprint. The institute has systematically assessed the energy efficiency of the leading POS networks against their POW peers. The paper explored the electricity consumption and carbon footprint of various proof-of-stake networks, including TRON, Avalanche, Algorand, Cardano, Polkadot, Tezos, and Solana (SOL) compared them to the leading proof-of-work networks, Bitcoin and Ethereum.

The report findings

The findings were quite shocking. It was identified that the energy consumption of PoW blockchains such as Bitcoin and Ethereum is over 83 and 22 million kWh, respectively. In contrast, PoS blockchain TRON had a yearly energy consumption of just 162,868 kWh. This represents 99.9% less power than that consumed by Bitcoin and Ethereum.

Drilling down into the data, it was found that while chains like Bitcoin and Ethereum guzzle as much energy as 8.5 million U.S. households and 1.6 million U.S. households, respectively, TRON’s energy consumption is equal to the energy used by just 15 average U.S. households.

This puts TRON in the running as one of the most sustainable and environmentally friendly chains in the Web3 arena. TRON built its unique Delegated Proof of Stake (DPoS) consensus mechanism, from the ground up, while Ethereum is struggling to adapt its chain to a new PoS model.

According to the Founder of TRON, Justin Sun, “The growing amount of energy consumption of modern-day blockchains is not sustainable in the long term for neither users nor economies at scale. The best networks are the ones that can promote decentralization while keeping their carbon footprint low in order to help lead the world into a greener future.”

As governments are laser-targeted on bringing carbon emissions to zero, with new regulations and incentives, “These swift changes are bringing rise to more projects focused on creating a greener economy; the same is true in the blockchain industry.”

Why is PoS so much friendlier for the planet?

PoW chains require miners to use massive amounts of energy to solve complex riddles in order to be rewarded. The PoS model, on the other hand, requires participants to stake their holdings in exchange for rewards. Other protocols like Solana and Cardano also use the PoS model, like TRON, however thanks to TRON’s unique DPoS model, it successfully uses a fraction of the energy of many of its other PoS counterparts.

Leading digital asset custody platform GK8 recently integrated its proprietary, end-to-end solution with premier blockchain development platform Polygon to offer financial institutions scalable, affordable, secure, and sustainable access to the Web3.0 ecosystem. GK8 customers are now able to seamlessly manage and monetize their Polygon and $MATIC holdings directly through GK8’s institutional-grade digital custody solution. 

“We are happy to offer our customers ‘out of the box’ support for Polygon’s layer-1 protocol, including Polygon’s layer-2 smart contracts, ERC-20 tokens on top of Polygon, dApps, DeFi, and $MATIC cold staking,” says Lior Lamesh, CEO and Co-Founder of GK8.  This integration affords our customers more agility in managing their crypto assets, which is key to creating new revenue streams.”

Today’s crypto market is in flux, creating additional challenges in digital-asset management traditional and crypto-native institutions. On one hand, institutions need an end-to-end management solution providing the maximal agility required to take advantage of market upsides. 

But on the other hand, they necessitate an enterprise-grade, battle-tested solution capable of providing secure custody for their most precious assets. Finally, they need a strategic technology partner to help them build the infrastructure required to leverage the high-growth potential, drive new revenue streams, and maintain a competitive advantage. 

GK8’s regulation-ready solution includes both a Cold Vault as well as an MPC vault. The company’s unique Cold Vault is the only solution available on the market that can create, sign, and send blockchain transactions without an Internet connection. This grants institutions an unprecedented level of security and leaves no openings for hackers to exploit. The Cold Vault is paired with a patented high-performance MPC wallet used for high-frequency automatic transactions. 

As more and more businesses realize the benefit in tokenizing physical assets, GK8’s solution also supports the secure tokenization of traditional assets. Furthermore, GK8’s platform also features general support for all Ethereum Virtual Machine-compatible layer-1 blockchains (including Polygon), and grants users instance access to all layer-2 smart contracts on supported chains. The platform has an arrangement with AON for financial institutions to quickly and easily access insurance for their digital assets of up to $750 million per vault, the highest in the market. 

Polygon, with close to 40,000 decentralized apps (dApps) in the works, brings scalable, affordable, secure, and sustainable solutions to the Ethereum ecosystem. As an Ethereum scaling platform, Polygon enables developers to build user-friendly dApps at scale with reduced gas fees without compromising on security. Polygon is the most recent protocol to be integrated by GK8. Now GK8 customers can retain the agility and flexibility needed to seamlessly provide custody and DeFi services on top of the Polygon blockchain and the $MATIC token.  

“We are excited to be integrated into GK8’s infrastructure,” says Arjun Kalsy, VP of Growth at Polygon. “This integration gives GK8 customers added agility and the flexibility they need to manage the diversity of their portfolio, all without any additional R&D or integrations. Institutions can now access staking, cold staking, and DeFi protocols directly from GK8’s digital asset custody solution. At Polygon we will continue to build our ecosystem and ensure that our builders have access to the best in class infrastructure.”