Just last year, it seemed like everyone was talking about cryptocurrencies — from celebrities to athletes to news anchors and investors. Even elected officials are getting in on the action, as local governments look to cryptocurrencies as a solution to job growth, income inequality, and more.
But now, the hype cycle for cryptocurrencies is over (despite Bitcoin’s gains in recent days). In the wake of a major crash in the cryptocurrency industry, entrepreneurs and venture capitalists have turned to generative artificial intelligence (AI) tools like those powering ChatGPT and other systems.
This begs some questions: What is the state of the cryptocurrency boom at a time when new AI systems are dominating the headlines? Where did cryptocurrency-related job and entrepreneurial growth recover after the recent crash, and where did it not? What lessons can state and local officials learn from this so they can prepare for the next big tech opportunity?
To explore these questions, this article uses new data to examine the level and location of cryptocurrency activity in the United States. Track overall business activity by analyzing job postings in the cryptocurrency and blockchain industry. Based on measures of entrepreneurial vitality using data from the entrepreneurial sector, these signals are discussed in order to assess what the most sensible next policy moves are for state and local lawmakers.
Cryptocurrency trends have been volatile in recent years
Even compared to the industry's long history of instability, cryptocurrency trends over the past few years have been turbulent. At the height of the latest hype cycle, some state and local government leaders embraced cryptocurrencies. These officials compete for cryptocurrency-related jobs by introducing bills or launching public relations stunts such as announcing that they will receive salaries in cryptocurrency, or promoting the city’s brand of cryptocurrency. In other cases, they have explored ways to allow residents to pay for government services with cryptocurrencies, or allow governments to mine bitcoin.
However, by the end of 2022, the spectacular collapse of Sam Bankman-Fried (SBF is the founder of FTX) and his cryptocurrency exchange FTX triggered a catastrophic tide that caused the value of cryptocurrencies to plummet. Several cryptocurrency companies have filed for bankruptcy, and many retail investors have lost their life savings, with minority investors being hit particularly hard. The collapse has caused many local leaders to abandon their earlier "gold rush" efforts, while regulators and other officials have stepped in and have shifted their focus to protecting consumers.
In short, overall business and entrepreneurial activity has gone through a wild and varied course, affecting very unevenly in different places. We can paint a picture of the industry’s volatility by looking at job postings asking for cryptocurrency and blockchain skills (a measure of overall hiring and employment activity) and the number of cryptocurrency and blockchain startups.
**During the mid-2010s, job postings for the industry showed an overall upward trend as cryptocurrencies became more popular. **However, like the prices of cryptocurrencies, this trend is not without volatility. **As the value of Bitcoin fluctuates, so do job postings, with the sharpest spikes occurring in 2021 and early 2022. **
Then,** in the second half of 2022, with the failure of cryptocurrency projects such as TerraUSD, Three Arrows Capital, Celsius, and Voyager, and the collapse of FTX at the end of the year, there was a sharp decline. **This decline has been dramatic, but it’s worth noting that even at its peak, the number of job postings in the cryptocurrency industry was minimal: less than 0.15% of all job postings, and less than 0.08% today.
Startup activity has also been volatile in the cryptocurrency space, with the growth and decline of startups closely tied to the value of Bitcoin. For example, through January 2018, the number of cryptocurrency startups increased and then plummeted - which coincided very well with the collapse in the value of Bitcoin and cryptocurrencies at that time.
**During the pandemic, the number of cryptocurrency startups slowly began to rise again, and then began to decline in January 2022 - again closely mirroring the gradual decline in the price of Bitcoin between January 2022 and May 2022, and An even sharper decline was caused by the failure of various cryptocurrency projects (mentioned above) and the FTX fiasco. **
These trends are not expressed evenly across the major metropolitan areas. On the contrary: While cryptocurrency consumer activity and disruption is widely distributed, some pre-existing technology and financial hubs are seeing heavy concentrations of business and entrepreneurial activity, some of which are also seeing cryptocurrency-related job postings (and possible employment ) at least partially bounced in a few places.
In this regard, only a very small number of metropolitan areas will dominate cryptocurrency activity in the United States from January 2020 to April 2023. **For example, places where cryptocurrency activity is most prominent include the New York, San Francisco, and Los Angeles metro areas—all of which were large tech or financial hubs to begin with. In most other places, by contrast, the number of cryptocurrency-related job postings plummeted as the TerraUSD stablecoin broke shortly after bitcoin's price fell in 2022. In the wake of this cryptocurrency crash, few places have seen a rebound in jobs following this plunge, except for the New York, San Francisco, and Los Angeles metro areas, as well as the Miami and Tampa, Fla., metro areas, which have struggled during the pandemic. Attracts a large number of remote workers.
However, the number of cryptocurrency-related job postings in these Florida metro areas — both increased activity and rebound — was significantly smaller than New York and San Francisco. And even metro areas with pre-existing tech or financial hubs saw job postings fall again after the November 2022 FTX crash, as bitcoin prices fell and volatile cryptocurrency markets were shaken up again.
Cryptocurrency Concentrates in 'Super' Cities, Elsewhere Lags
The volatility associated with cryptocurrency business activity — and its geographic patterns — presents important considerations as local leaders strive to attract economic growth to their regions.
Despite efforts by some state and local governments to attract cryptocurrency activity, few startups and jobs associated with it are stable or sustainable. While the aforementioned large, established markets have seen much of the recovery in job activity following the cryptocurrency market crash, recent statistics show that, in most cases, the long-term jobs or Entrepreneurial income is very small. Instead, in many cases, what they have created is distressing pollution and energy costs, failed business projects, significant consumer and investor losses, and outbreaks of fraud that local law enforcement struggles to contain.
Given this, local and state leaders looking to build regional economies should carefully consider whether the current cryptocurrency industry is worth their investment of time, resources, and taxpayer dollars. At the same time, leaders may also consider whether they can develop other advanced new industries in order to stimulate economic growth.
For the first point: **The remarkable cryptocurrency surge and relatively persistent activity witnessed in New York, San Francisco, and Los Angeles underscores how disruptive technologies, especially digital ones, are concentrated in the largest markets, often leaving the rest behind. **While many local leaders have attempted to attract cryptocurrency businesses to create or grow tech hubs in their regions, the evidence presented here shows that metro areas, the most important and resilient cryptocurrency hubs, are seeing significant The growth of cryptocurrencies has preceded the development of solid regional strengths, either technological or financial. By contrast, most other metro areas struggle with a recession in the cryptocurrency labor market and startups after the market crash in spring 2022, and haven't recouped those losses significantly. In short, the digitally rich win while most everyone else is flat.
These dynamics present a caveat for regional leaders: **It seems more important to have a tech hub in the first place than a clear effort to attract crypto firms. **
Also worth noting: the presence of a massive local tech ecosystem seems to be more important than lax regulation. For example, the relatively active New York metro area happens to be one of the few places with significant cryptocurrency regulations. Despite claims by cryptocurrency enthusiasts to the contrary, regulation in New York does not appear to be hampering cryptocurrency-related job growth, as it remains one of the few regions with consistent job posting activity. Meanwhile, the "crypto-friendly" environment hasn't seen a quicker rebound.
How local leaders can prepare for the next big tech opportunity
**The short-lived cryptocurrency boom may have faded in terms of thinking about future economic development, but the past few years can still offer lessons for local leaders on how to leverage other emerging technologies, especially given the current interest in generative AI . **
One place for leaders to start thinking is of course a pragmatic baseline check of any future target technology and its use cases. Notably, even as regions invest in cryptocurrencies and related technologies, there have been prominent reports of investment scams, numerous questions about major use cases and financial inclusion narratives, and a great deal of controversy associated with crypto institutions. Many economists and business leaders flagged cryptocurrencies as a bubble fairly early on; it would help if local economic developers did a bit more due diligence.
Meanwhile, authoritative consensus lists of “critical technologies”—such as the Pentagon’s “Critical Technology Areas for Defense”—have existed for years and provide promising lists of technologies suitable for use in high-potential economic development strategies. The recent CHIPS and Science Act named 10 of these “critical technology areas”—including AI, quantum information science, immersive technologies, advanced energy, and biotechnology—as recipients of regional economic development awards from the Economic Development Administration and the National Science Foundation. possible subject. This means that projects focused on these well-vetted technologies are clearly prioritized in these institutions' major competitions, which are backed by hundreds of millions of dollars. These and other government-sponsored competitions may lead to better opportunities.
As such, as local leaders emerge from the woes of cryptocurrencies, they should ask tough questions about the future emerging technology opportunities they encounter:
Will this industry be part of the concentration of existing technology in our region?
Are we basing our strategy on rigorous, empirical evidence, taking into account the best knowledge about the industries involved, and the specific needs of our region and workforce?
Is the technology or industry we seek to attract speculative, or based on well-documented production activity and potential? Are we attracting an industry that will create stable, sustainable jobs?
Local leaders should also do a more in-depth reorientation of how their economies develop, looking beyond attracting business activity - even with "hot" individual technologies. This requires a deeper focus on the origins and broader dynamism of their local 'innovation ecosystem' - an interconnected set of institutions (including universities, workforce organisations, companies, government, startups and investors), Their interplay in the region will help entrepreneurs and businesses of all kinds to succeed. Hence the particular value of the ecosystem approach:** An ecosystem perspective enables a region to benefit not only from individual entrepreneurial and technological opportunities, but also from the region's broader economic ferment. **
Local leaders are under intense pressure to innovate, adapt to new technologies, and stimulate economic growth. **In most, if not all, places, the collapse of the crypto bubble should prompt local leaders to turn to other regional economic development strategies. **This should also be seen as a useful warning: not all emerging technologies are promising, no matter how hyped they are. Local leaders should conduct due diligence to ensure that emerging technologies are both proven and suitable for their economic development goals.
In addition, local leaders should consider building a more robust innovation ecosystem rather than relying solely on the development of a single industry or technology. This includes fostering local education and training resources to meet changing workforce needs, encouraging and supporting business innovation, and enhancing neighborhood attractiveness through smart urban planning and infrastructure investments. Ultimately, the success of economic development will depend on a diversified economic structure that can adapt to and take advantage of various technological opportunities, rather than just chasing a hot trend that may be short-lived.
In conclusion, the collapse of the cryptocurrency boom offers a valuable lesson: Local leaders need to be cautious, wise, and farsighted when deciding how best to use limited resources to attract and grow fledgling industries. While emerging technologies may hold enormous economic potential, they also pose risks and challenges. To achieve sustainable economic development, leaders need to focus on building a strong, diverse economic ecosystem rather than chasing hot trends that may be short-lived.
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The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
Crypto Crash and Layoffs: Lessons from Building an Innovation Ecosystem
Author: @Tonantzin_LC, markmuro1, Sifan_Liu; Compiler: Block unicorn
Just last year, it seemed like everyone was talking about cryptocurrencies — from celebrities to athletes to news anchors and investors. Even elected officials are getting in on the action, as local governments look to cryptocurrencies as a solution to job growth, income inequality, and more.
But now, the hype cycle for cryptocurrencies is over (despite Bitcoin’s gains in recent days). In the wake of a major crash in the cryptocurrency industry, entrepreneurs and venture capitalists have turned to generative artificial intelligence (AI) tools like those powering ChatGPT and other systems.
This begs some questions: What is the state of the cryptocurrency boom at a time when new AI systems are dominating the headlines? Where did cryptocurrency-related job and entrepreneurial growth recover after the recent crash, and where did it not? What lessons can state and local officials learn from this so they can prepare for the next big tech opportunity?
To explore these questions, this article uses new data to examine the level and location of cryptocurrency activity in the United States. Track overall business activity by analyzing job postings in the cryptocurrency and blockchain industry. Based on measures of entrepreneurial vitality using data from the entrepreneurial sector, these signals are discussed in order to assess what the most sensible next policy moves are for state and local lawmakers.
Cryptocurrency trends have been volatile in recent years
Even compared to the industry's long history of instability, cryptocurrency trends over the past few years have been turbulent. At the height of the latest hype cycle, some state and local government leaders embraced cryptocurrencies. These officials compete for cryptocurrency-related jobs by introducing bills or launching public relations stunts such as announcing that they will receive salaries in cryptocurrency, or promoting the city’s brand of cryptocurrency. In other cases, they have explored ways to allow residents to pay for government services with cryptocurrencies, or allow governments to mine bitcoin.
However, by the end of 2022, the spectacular collapse of Sam Bankman-Fried (SBF is the founder of FTX) and his cryptocurrency exchange FTX triggered a catastrophic tide that caused the value of cryptocurrencies to plummet. Several cryptocurrency companies have filed for bankruptcy, and many retail investors have lost their life savings, with minority investors being hit particularly hard. The collapse has caused many local leaders to abandon their earlier "gold rush" efforts, while regulators and other officials have stepped in and have shifted their focus to protecting consumers.
In short, overall business and entrepreneurial activity has gone through a wild and varied course, affecting very unevenly in different places. We can paint a picture of the industry’s volatility by looking at job postings asking for cryptocurrency and blockchain skills (a measure of overall hiring and employment activity) and the number of cryptocurrency and blockchain startups.
**During the mid-2010s, job postings for the industry showed an overall upward trend as cryptocurrencies became more popular. **However, like the prices of cryptocurrencies, this trend is not without volatility. **As the value of Bitcoin fluctuates, so do job postings, with the sharpest spikes occurring in 2021 and early 2022. **
Then,** in the second half of 2022, with the failure of cryptocurrency projects such as TerraUSD, Three Arrows Capital, Celsius, and Voyager, and the collapse of FTX at the end of the year, there was a sharp decline. **This decline has been dramatic, but it’s worth noting that even at its peak, the number of job postings in the cryptocurrency industry was minimal: less than 0.15% of all job postings, and less than 0.08% today.
Startup activity has also been volatile in the cryptocurrency space, with the growth and decline of startups closely tied to the value of Bitcoin. For example, through January 2018, the number of cryptocurrency startups increased and then plummeted - which coincided very well with the collapse in the value of Bitcoin and cryptocurrencies at that time.
**During the pandemic, the number of cryptocurrency startups slowly began to rise again, and then began to decline in January 2022 - again closely mirroring the gradual decline in the price of Bitcoin between January 2022 and May 2022, and An even sharper decline was caused by the failure of various cryptocurrency projects (mentioned above) and the FTX fiasco. **
These trends are not expressed evenly across the major metropolitan areas. On the contrary: While cryptocurrency consumer activity and disruption is widely distributed, some pre-existing technology and financial hubs are seeing heavy concentrations of business and entrepreneurial activity, some of which are also seeing cryptocurrency-related job postings (and possible employment ) at least partially bounced in a few places.
In this regard, only a very small number of metropolitan areas will dominate cryptocurrency activity in the United States from January 2020 to April 2023. **For example, places where cryptocurrency activity is most prominent include the New York, San Francisco, and Los Angeles metro areas—all of which were large tech or financial hubs to begin with. In most other places, by contrast, the number of cryptocurrency-related job postings plummeted as the TerraUSD stablecoin broke shortly after bitcoin's price fell in 2022. In the wake of this cryptocurrency crash, few places have seen a rebound in jobs following this plunge, except for the New York, San Francisco, and Los Angeles metro areas, as well as the Miami and Tampa, Fla., metro areas, which have struggled during the pandemic. Attracts a large number of remote workers.
However, the number of cryptocurrency-related job postings in these Florida metro areas — both increased activity and rebound — was significantly smaller than New York and San Francisco. And even metro areas with pre-existing tech or financial hubs saw job postings fall again after the November 2022 FTX crash, as bitcoin prices fell and volatile cryptocurrency markets were shaken up again.
Cryptocurrency Concentrates in 'Super' Cities, Elsewhere Lags
The volatility associated with cryptocurrency business activity — and its geographic patterns — presents important considerations as local leaders strive to attract economic growth to their regions.
Despite efforts by some state and local governments to attract cryptocurrency activity, few startups and jobs associated with it are stable or sustainable. While the aforementioned large, established markets have seen much of the recovery in job activity following the cryptocurrency market crash, recent statistics show that, in most cases, the long-term jobs or Entrepreneurial income is very small. Instead, in many cases, what they have created is distressing pollution and energy costs, failed business projects, significant consumer and investor losses, and outbreaks of fraud that local law enforcement struggles to contain.
Given this, local and state leaders looking to build regional economies should carefully consider whether the current cryptocurrency industry is worth their investment of time, resources, and taxpayer dollars. At the same time, leaders may also consider whether they can develop other advanced new industries in order to stimulate economic growth.
For the first point: **The remarkable cryptocurrency surge and relatively persistent activity witnessed in New York, San Francisco, and Los Angeles underscores how disruptive technologies, especially digital ones, are concentrated in the largest markets, often leaving the rest behind. **While many local leaders have attempted to attract cryptocurrency businesses to create or grow tech hubs in their regions, the evidence presented here shows that metro areas, the most important and resilient cryptocurrency hubs, are seeing significant The growth of cryptocurrencies has preceded the development of solid regional strengths, either technological or financial. By contrast, most other metro areas struggle with a recession in the cryptocurrency labor market and startups after the market crash in spring 2022, and haven't recouped those losses significantly. In short, the digitally rich win while most everyone else is flat.
These dynamics present a caveat for regional leaders: **It seems more important to have a tech hub in the first place than a clear effort to attract crypto firms. **
Also worth noting: the presence of a massive local tech ecosystem seems to be more important than lax regulation. For example, the relatively active New York metro area happens to be one of the few places with significant cryptocurrency regulations. Despite claims by cryptocurrency enthusiasts to the contrary, regulation in New York does not appear to be hampering cryptocurrency-related job growth, as it remains one of the few regions with consistent job posting activity. Meanwhile, the "crypto-friendly" environment hasn't seen a quicker rebound.
How local leaders can prepare for the next big tech opportunity
**The short-lived cryptocurrency boom may have faded in terms of thinking about future economic development, but the past few years can still offer lessons for local leaders on how to leverage other emerging technologies, especially given the current interest in generative AI . **
One place for leaders to start thinking is of course a pragmatic baseline check of any future target technology and its use cases. Notably, even as regions invest in cryptocurrencies and related technologies, there have been prominent reports of investment scams, numerous questions about major use cases and financial inclusion narratives, and a great deal of controversy associated with crypto institutions. Many economists and business leaders flagged cryptocurrencies as a bubble fairly early on; it would help if local economic developers did a bit more due diligence.
Meanwhile, authoritative consensus lists of “critical technologies”—such as the Pentagon’s “Critical Technology Areas for Defense”—have existed for years and provide promising lists of technologies suitable for use in high-potential economic development strategies. The recent CHIPS and Science Act named 10 of these “critical technology areas”—including AI, quantum information science, immersive technologies, advanced energy, and biotechnology—as recipients of regional economic development awards from the Economic Development Administration and the National Science Foundation. possible subject. This means that projects focused on these well-vetted technologies are clearly prioritized in these institutions' major competitions, which are backed by hundreds of millions of dollars. These and other government-sponsored competitions may lead to better opportunities.
As such, as local leaders emerge from the woes of cryptocurrencies, they should ask tough questions about the future emerging technology opportunities they encounter:
Will this industry be part of the concentration of existing technology in our region?
Are we basing our strategy on rigorous, empirical evidence, taking into account the best knowledge about the industries involved, and the specific needs of our region and workforce?
Is the technology or industry we seek to attract speculative, or based on well-documented production activity and potential? Are we attracting an industry that will create stable, sustainable jobs?
Local leaders should also do a more in-depth reorientation of how their economies develop, looking beyond attracting business activity - even with "hot" individual technologies. This requires a deeper focus on the origins and broader dynamism of their local 'innovation ecosystem' - an interconnected set of institutions (including universities, workforce organisations, companies, government, startups and investors), Their interplay in the region will help entrepreneurs and businesses of all kinds to succeed. Hence the particular value of the ecosystem approach:** An ecosystem perspective enables a region to benefit not only from individual entrepreneurial and technological opportunities, but also from the region's broader economic ferment. **
Local leaders are under intense pressure to innovate, adapt to new technologies, and stimulate economic growth. **In most, if not all, places, the collapse of the crypto bubble should prompt local leaders to turn to other regional economic development strategies. **This should also be seen as a useful warning: not all emerging technologies are promising, no matter how hyped they are. Local leaders should conduct due diligence to ensure that emerging technologies are both proven and suitable for their economic development goals.
In addition, local leaders should consider building a more robust innovation ecosystem rather than relying solely on the development of a single industry or technology. This includes fostering local education and training resources to meet changing workforce needs, encouraging and supporting business innovation, and enhancing neighborhood attractiveness through smart urban planning and infrastructure investments. Ultimately, the success of economic development will depend on a diversified economic structure that can adapt to and take advantage of various technological opportunities, rather than just chasing a hot trend that may be short-lived.
In conclusion, the collapse of the cryptocurrency boom offers a valuable lesson: Local leaders need to be cautious, wise, and farsighted when deciding how best to use limited resources to attract and grow fledgling industries. While emerging technologies may hold enormous economic potential, they also pose risks and challenges. To achieve sustainable economic development, leaders need to focus on building a strong, diverse economic ecosystem rather than chasing hot trends that may be short-lived.