Bitcoin has been one of the best-performing assets of the year, fostering hope in the crypto community that price declines seen in the wake of the collapse of FTX were a mere bump in the road toward more widespread adoption of the nascent technology.
Price increases have not been paired, however, with an increase in job listings or new startups in the sector, according to a new report from the Brookings Institution. That may leave some policymakers regretting their embrace of the technology.
“Despite some state and local governments’ efforts to attract crypto activity, few of the associated startups and jobs have been stable or sustainable,” according to the report, authored by Tonantzin Carmona, a fellow at Brookings Metro who studies the impact of public policy on local economies.
Now see: Supreme Court’s student-loan decision could be a blueprint for blocking SEC’s war on crypto
The report looks at the share of job listings that require “crypto and blockchain skills” as a share of overall listings as well as the number of startups in the space, and found that crypto job openings have declined significantly since the FTX collapse last November.
“During the period of growing crypto popularity in the mid-2010s, industry job postings saw an overall upward trend. However, much like the prices of cryptocurrencies themselves, this trend was not without volatility,” Carmona wrote.
“As bitcoin
BTCUSD,
values fluctuated, so did job postings, with the most dramatic surge taking place in 2021 and early 2022,” she added, noting that the failure of crypto projects like TerraUSD and FTX was followed by a “dramatic” decline in the number of crypto job postings.
“It bears noting that the number of crypto industry job postings was extremely small even at the peak: less than 0.15% of all postings, with the current level lingering at less than 0.08%,” according to the report.
There has been an even more dramatic decline in the the rate of startup births in the crypto space, according to a Brookings analysis of data from Crunchbase, with entrepreneurial activity peaking in early 2018 and declining to near-zero today.
The report argues that attempts by some local policymakers like Miami mayor and Republican presidential hopeful Francis Suarez to leverage crypto for local economic development were largely unsuccessful and that any economic benefits that have derived from crypto have gone to traditional tech hubs like San Francisco and New York.
Also read: Here are the Republicans running for president
“The crypto gold rush may be over, but the past few years can provide local leaders with lessons on how to capitalize on emerging technologies,” Carmona wrote, arguing that policymakers may have more success betting on technologies backed with federal funding, like artificial intelligence, quantum information science and biotechnology.
The crypto surge also highlights the difficulty that smaller cities often have in attracting economic activity from disruptive technologies, according to the report.
“The significant crypto surge and relatively sustained activity witnessed in New York, San Francisco, and Los Angeles underscore the “superstar” nature of how disruptive technologies (especially digital ones) cluster in the largest markets, while frequently leaving other places behind,” Carmona wrote.
“Even as many local leaders sought to attract crypto businesses to create or grow technology hubs in their regions,” she added, “the evidence presented here suggests that the metro areas that emerged as the most significant and resilient crypto centers had already developed solid regional advantages in tech or finance before seeing sizable crypto growth.”
Read the full article here