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Last year around this time, a toy called a cryptokitty sold for US$170,000. A real estate agent remade himself as CoinDaddy, producing cryptocurrency-themed music videos. The man behind a company called Ripple became for a moment richer than Mark Zuckerberg. Kids barely out of high school were buying Lamborghinis because of a crypto-meme. Experts went on CNBC to say bitcoin was going to reach US$100,000 a coin.

For a few sweet months of 2018, all of Silicon Valley was wrapped up in frenzied easy money and a fantasy of remaking the world order with cryptocurrencies and a related technology called the blockchain. A flood of joy hit the Bay Area. The New York Times ran with the trend in an article with the headline “Everyone Is Getting Hilariously Rich and You’re Not.” It was temporarily true.

And just as the American public had been given every possible blockchain explainer that could be written, the whole thing collapsed. The bubble popped.

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Today, the price of bitcoin – US$19,783 last December – is US$3,680. Litecoin was US$366 a coin; it’s now US$30. Ethereum was US$1,400 in January; today, it’s US$130.

One recent crypto-holiday party offered “broken Lambo dreams and an open bar to drown your sorrows in.”

This December closes out cryptocurrency’s most exciting year, ending in a terrible, sober headache of a winter.

At the meetups and the work spaces that remain, those who have stayed are calling this “the winter of crypto.” Believers say this is only “the trough of disillusionment,” pointing to a chart that posits all new technology goes through a similar trough before exploding into inevitable glory.

Those still chipping away at crypto-dreams insist that this is all a good thing because only the serious ones, the true crypto-believers, remain.

“It’s painful to lose money, but it’s a necessary step,” said Robert Neivert, an investor with the venture capital firm 500 Startups. “2018 was about moving from hype to product.”

This year, the blockchain industry – a subset of the cryptocurrency industry that would very much like to live on its own – went through a Cambrian explosion. But first, an explanation of the blockchain: A blockchain is a relatively new kind of database that was initially introduced with bitcoin. It is not the digital currency. It is the underlying technology that helps manage the currency. Most important, it is decentralized so no one person, government or business controls it.

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Blockchain became a solution for everything – blockchain for journalism, for pot, for dentists. At the kernel of it all was real technological progress and a growing understanding that this decentralized technology could transform financial systems. But the excitement spun out of control.

Even adding the word “blockchain” made stock soar. When Long Island Iced Tea Co. changed its name to Long Blockchain Co., its stock went up 500 percent in a day. Scammers flooded the space, launching dubious new investment schemes called “initial coin offerings.”

The computing power needed to “mine” a bitcoin or other cryptocurrency is now sometimes costing more than that coin is worth. Mines – actually, they are electricity-needy data centers – are shutting down. Images of electronics piled up on street corners are going viral. As demand for bitcoin has dwindled, bitcoin’s algorithm has adjusted and the coin has become easier to mine.

But this is actually good, crypto-experts argue.

“The fact that miners are shutting down and difficulty is decreasing is a feature, not a bug, of bitcoin’s design,” venture capitalist Arianna Simpson wrote on Twitter.

Some in the cryptocurrency business would just like the world to know that there are still people working on it. Julian Spediacci, a cryptocurrency investor in San Francisco with his twin brother, James, said he would like people to know that he is still alive and identifies as a HODLer, or someone who is not selling despite market fluctuations.

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“A lot of people are reaching out, and they want to find out what happened to us, and if we’re still alive, so it’d be great to clarify that there are a lot of OG HODLers,” Mr. Spediacci said, using language common in the crypto-industry to indicate he would remain an investor.

Not everyone is struggling in the downturn. For lawyers, it is a new gold rush.

“Now that the market dropped, everyone is getting sued,” said Chante Eliaszadeh, a law student and the president of a blockchain law club called Blockchain at Berkeley Law.

She said the legal scene is pretty exciting right now. As the Securities and Exchange Commission cracks down, some scammers are trying to escape to Bali or Malta, where regulations are more lax.

At one holiday party in Palo Alto this year, the theme was “real.”

Organizers had pasted the motto – “Real People, Real Money, Real Deals” – on the walls, on boards, on slide shows and handouts.

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Moderating a panel was Radhika Iyengar-Emens, a founding partner at a venture firm that specializes in cryptocurrency and blockchain startups called StarChain Ventures.

“I think we’re going to see a lot of real use cases,” Ms. Iyengar-Emens said. “And these guys will be here for those very real use cases.”

A use case would be a regular consumer’s being able to use a cryptocurrency to do something other than make a speculative investment.

The audience sat in folding white chairs. The snacks were Ritz Bits.

“What is QuarkChain?” QuarkChain’s founder and chief executive, Qi Zhou, asked the audience. “Next generation blockchain.”

Kerry Washington, a member of the Litecoin Foundation, which promotes Litecoins, gave a presentation about the year, in which the coin lost more than 90 percent of its value.

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He talked about a big Litecoin summit this year, which on one slide he specified cost a quarter-million dollars. There, guests could buy candy with Litecoins. This showed everyone how useful Litecoin could be, he said.

The trouble was always that we already have something that lets us buy candy.

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