Century-old Japanese game developer CyberStep, Inc. is going all in on the crypto craze with a $1.4 million wager. The goal? To create a reserve currency, by converting tokens generated through the usage of their bright, new, Web3 services into BTC and ETH. It’s a mighty gamble, to be sure, but will that risk truly be rewarded? Let’s run the numbers and find out what the data actually shows, minus the fanfare.

Bitcoin and Ethereum's Rollercoaster Ride

Even Bitcoin and Ethereum, the “blue chips” of the crypto world, are anything but stable. On the arc of a presentation, we’ve all experienced the dizzying peaks and stomach-churning valleys. The question isn’t if they’ll increase, but when, and by how much. CyberStep’s plan is clearly a long-term play. In crypto, long-term is more like dog years – it’s all moving at a million miles an hour.

A glance at some historical data paints an unsettling picture. If you look at the upward trend of bitcoin, it has had several drawdowns of more than 70%. Ethereum isn't far behind. Can CyberStep weather those storms? While their phased investment approach is clever indeed, it isn’t without its flaws. They don’t have to think back to events such as the Mt. Gox collapse of 2014, or the Terra/Luna implosion of 2022. These aren’t just historical footnotes, they’re cautionary tales.

  • Average Bitcoin Volatility (Past 5 Years): 60-80% annually
  • Average Ethereum Volatility (Past 5 Years): 70-90% annually

CyberStep’s plan to allow conversion of tokens earned in their various Web3 services into BTC and ETH is where things get very cool. The Web3 gaming space is indeed bubbling with gaming potential, but its ecosystem is a minefield of vaporware and unsustainable tokenomics. We know that most Web3 games and experiences have over-promised the moon and produced… crickets.

Web3 Gaming: A Promising But Risky Landscape

Think about it: how many genuinely fun and engaging Web3 games can you name off the top of your head? Most are just clunky, pay-to-win and frankly not that fun. For CyberStep’s strategy to pay off, their Web3 games must find success. They have to bring players in and keep them engaged, and their in-game economies must be sound and sustainable.

This isn't just about building a crypto reserve. It's about building a thriving ecosystem. And that's a much harder challenge. This is where the unexpected connection comes in: CyberStep is essentially betting that their game development skills will translate into success in a completely different, much more volatile market. Think about a Michelin-starred chef opening a hot dog cart. Just because a chef has amazing Michelin-starred skills does not mean that the kitchen isn’t set up for failure.

CyberStep touts that this crypto reserve will serve as an inflation hedge. Beyond these things, it will offer diversification and produce capital for future Web3 undertakings. Is it truly a hedge, or is it just an intentional bet?

Is This a Hedge or a Gamble?

Here's the thing: Bitcoin and Ethereum, while often touted as inflation hedges, haven't always acted that way. In reality, during times of high inflation, they've just as easily behaved like speculative assets as they have like safe havens.

So, what's the verdict? I think CyberStep's move is a fascinating experiment, but it's not without significant risks.

In order to be successful, they have to change and create new things. They need to be adults enough to understand the unique dynamics of the crypto marketplace. They need to be super nimble, data-driven and willing to pivot at a moment's notice.

Ultimately, CyberStep’s $1.4 million crypto bet is a gamble. Will it pay off? Only time, and the data, will tell. But one thing is for sure: it's a move that could either catapult them to the forefront of the Web3 revolution or send them crashing back to earth. And that, my friends, is precisely why it is must-watch.

  • Potential Upside: Early adoption of Web3, diversified revenue streams, brand recognition.
  • Potential Downside: Market volatility, regulatory hurdles, failed Web3 game launches, negative PR.

This move could inspire other traditional game developers, but makes them anxious because the uncertainty, threats, and potential negative consequences are enormous.

Ultimately, CyberStep's $1.4 million crypto bet is a high-stakes game. Will it pay off? Only time, and the data, will tell. But one thing is for sure: it's a move that could either catapult them to the forefront of the Web3 revolution or send them crashing back to earth. And that, my friends, is exactly why it's worth watching.

This move could inspire other traditional game developers, but also makes them anxious because the uncertainty, threats, potential negative consequences are enormous.