Vitalik Buterin, the creator of Ethereum who is leading various innovative scaling solutions such as Plasma and Casper, has stated during an exclusive interview with FT that most cryptocurrencies and tokens are still overvalued.
Before the cryptocurrency market peaked at around $900 billion and the bitcoin price surpassed $20,000, Buterin expressed his concerns over the valuation of the market and the majority of cryptocurrencies within it.
In early December 2017, when both major cryptocurrencies and small-scale tokens were surging exponentially in value, Buterin said:
“So total cryptocoin market cap just hit $0.5T today. But have we earned it? How many unbanked people have we banked? How much censorship-resistant commerce for the common people have we enabled? How many dapps have we created that have substantial usage? Low added value *per user* for using a blockchain is fine, but then you have to make up for it in volume. How much value is stored in smart contracts that actually do anything interesting? How much actual usage of micropayment channels is there actually in reality?”
Buterin questioned the valuation of the cryptocurrency market before it endured a major correction and its market valuation fell by more than 70 percent, most likely due to his concerns in regards to blind investors and speculators pouring money into the cryptocurrency space without building knowledge and fundamental understanding of the technologies behind public blockchains.
At the time, Buterin emphasized that although the answer to the questions above is not zero, the achievements and accomplishments blockchain projects and cryptocurrencies have made are not sufficient to justify te $500 billion valuation.
“The answer to all of these questions is definitely not zero, and in some cases it’s quite significant. But not enough to say it’s $0.5T levels of significant. Not enough,” said Buterin.
In February, the valuation of the cryptocurrency market dipped below the $250 billion mark and halved from the $0.5 trillion region where Buterin questioned the valuation of most cryptocurrencies. The cryptocurrency market is approaching the $500 billion region again and it recently crossed $400 billion.
In a recent interview with FT, Buterin echoed a similar stance he provided in December and noted that too many overvalued blockchain projects exist in the cryptocurrency market without a clear vision, mission, product, and strong development team.
“There’s projects that never had a soul, that are just like, ra-ra, price go up. Lambo[rghini], vrromm, buybuybuy now!” said Buterin. He added that projects like Tron, which was valued at $17 billion in December, have no clear development roadmap and products but are attracting investors in the space. He said, the valuation of the market is “far ahead of what this space has actually accomplished for the world.”
Valuation in April
The massive correction and pull back the cryptocurrency market experienced throughout 2018 may be healthy, given that the majority of analysts and experts including Buterin agreed that the market was overvalued. Tron was worth more than SpaceX, the most influential aerospace manufacturer in the world, without having launched a product and its mainnet.