Let me be perfectly clear: I am not a fan of cryptocurrency or NFTs. I find them rife with things that I cannot stand: greed, opulence, and a con job that is straightforward and singular in its grift. It's figuratively and literally burning our planet as I write this. I have no love for cryptocurrency, period.
That said, I think it will provide a crystal-clear answer to one of history's questions; a question that flies in the face of what actually happened:
(I'm not going to go into great detail on those events. Please see the articles for further details).
Fredrick Allen wrote two books about the 1920s and 1930s. The book about the 1920s was called Only Yesterday and it recounts an informal history of the USA from the end of the first World War up to 1929. The second book Since Yesterday recounts events in the 1930s leading up to World War II. They're fascinating accounts of the time-period and I sincerely hope you check them out.
One of the things I learned from those books was the building of the Florida Land Boom and the stock market bubble that would eventually crash the economy. During the Florida Land Boom there were scads of folks who were buying up every little bit of property in Florida in the hopes of either building on it to flip for a tidy profit, or just flipping the property to someone looking to get in on the hot market. Folks were literally buying and selling without even so much as lifting a dollar out of their wallet. After all, if you can sell something for more tan what you paid for it then you can use that windfall to pay your debts. This was also true of the stock market at the time. Excess was in the air and everyone was as convinced that the Stock Market would go up as they were that the sun would rise every morning. Which would have been great had they realized that stock markets have a habit of crashing when there is more money in stock than there is in liquidity (that is, they've printed more IOUs than they have the funds to pay, in a manner of speaking).
Eventually "line goes up" has the opposite effect. When someone can't pull their money out of a market because there's no money to pull out they panic. When someone over-extends themselves to buy land in Florida only to find that there's no buyer to be found then they default on on the deal and now there's a lot of land in Florida that is in various stages of default and a lot of "temporarily embarrassed millionaires-in-waiting" realizing they'd made a terrible mistake.
Which brings me to cryptocurrencies and the number of companies that are folding, laying off workers, and telling their clients that they're not going to honor transforming their Dunning-Krugerrands into good old-fashioned fiat money.
The parallels are striking to anyone paying attention. Unfortunately there's also folks believing that there will be an eventual rebound and the minor setback is just one of the boosters going temporarily off-line on their rocket ship to financial freedom and independence. "So long, suckers! You fools have no imagination and no ambition!"
Anyone who still believes this is part of the con, whether they want to believe it or not. It's the faith that keeps things flowing, and when the faith is gone then people (rightfully) panic.
And panic they did. In the 1920s there wasn't a clear demarcation between banks that stored and lent out money and investment banks. So banks did what was considered smart at the time and invested their customers' money in the stock market. What was smart before the crash quickly became a liability as banks saw their money evaporate with the market crash. Worse, people panicked and the banks no longer had any money to give them. And we're not talking about folks that threw their mad-money into the bank, we're talking about people that needed that money for day-to-day expenses. When you interrupt that flow your economy is in serious trouble.
(Oh, and a hurricane in Miami squashed a lot of folks wanting to build in Florida for a spell. Unfortunately folks haven't learned that lesson and keep repeating it over and over again. But I digress).
This lead the government to act. This lead to the passage of the Glass-Steagall Act (aka the Banking Act) which separated banks into the savings and loan type and the investment type. It also created the Federal Deposit Insurance Corporation (FDIC) which allows the government to seamlessly take over a failing bank and ensures that certain deposits within that bank are insured by the federal government.
In short the government stepped in to maintain the integrity of the banking system. It was a brilliant move to ensure that savings and loan banks would be able to make their commitments should there be a run on folks wanting their money during a time of crisis.
Which leads me to the unbridled and fancy free world of cryptocurrency. See, the conceit of cryptocurrency is that it can't be regulated by anyone other than the folks that have a controlling stake (and there are variations on who, what, or how a particular cryptocurrency is governed that are as numerous as the sand and about as tedious and uninteresting to enumerate). What folks are finding out the hard way is that no matter how brilliant or shiny your Dunning-Krugerrands are, if you can't convert them into goods or services they're just a worthless hash on a blockchain. Which is real bad when folks who think they're just "temporarily-embarrassed-millionaires" decide to go all-in in this thing that can't lose. Unfortunately governments are very slow to enact regulation legislation and the results are as predictable as you'd expect for a bunch of folks that feel they've cracked the secret of becoming that which they aspire to be. It's the equivalent of thinking that the secret to winning a game of blackjack is to constantly double your bet. Eventually you'll win big, right? Possibly, but odds are you're going to lose everything before that magical moment.
What absolutely sucks about this whole thing is that people are relearning lessons of history in a much shorter span of time. They're finding themselves conned by folks that do not have their best interests at heart and are only funding a Ponzi Scheme that needs new money to pay old debts. They're learning rapidly that just because a company says they have liquidity on parity with their Dunning-Krugerrands doesn't mean that's actually true (or was ever true). And as companies realize that cryptocurrency is a liability they'll stop providing much-needed offramps for people to turn their Dunning-Krugerrands into goods and services. In essence all they have is an digital IOU that is at best losing value and at worst is literally not worth the effort to retrieve what little value remains (if any).
History is littered with accounts of folks that thought they could build a perpetual money machine with just some simple steps. Unfortunately history's dumpster has the corpses of those who realized too late that either they were scammed, or were too high on their own hype-exhaust to realize they had gone too far and taken others with them. I don't foresee cryptocurrency recovering without strong regulations from outside parties that can actually hold folks accountable with rules and regulations (we call those "governments" and they do this shit at scale). Keeping cryptocurrencies unregulated is just asking for history to repeat itself. The crash of the 1920s after the heady "roaring" bit was disastrous. People lost everything because of greed. One could even argue that it resulted in decisions that ushered in the second World War. I'm not sure if the fall of cryptocurrency will go that far, but I'm not so certain. Whole countries are betting on "line goes up", and without regulation (or an outright ban) I don't think that's possible.
Cryptocurrency and blockchain are never the answer to any question. They're inefficient and terrible technologies that are literally burning the planet for greed. The only question they answer is "what happens when unbridled greed goes unchecked". Hopefully with a historical perspective you can plainly see that without government intervention the answer could have been far, far worse.