The Future of Crypto: the Bitcoin-only industry is rapidly evolving. Developers are looking for scalable and secure decentralized blockchain solutions. The Satoshi paper introduced bitcoin in 2008 as an unique and liberating notion. A peer-to-peer, decentralized payment system that anybody, anywhere, can use. It worked without intermediaries or exchange rates. And produced a single worldwide currency for all transactions.
But greed intervened.
Its intended use case has faded. Instead of being a payment method. Bitcoin has become an investment vehicle, a store of value, a digital gold.
PhD Blockchain expert and Rutgers Business School FinTech professor Merav Ozair.
Some early adopters of bitcoin were evangelists inspired by the 2008 financial crisis. To make a difference in the world and create a new global financial system. Most were speculators looking for a quick buck. A financial instrument, Bitcoin began trading on crypto exchanges. With substantial price fluctuation owing to speculators. But it has evolved from a payment method to a speculative financial instrument and the future of Crypto.
To become a global payment method, bitcoin must be scalable. But the decentralized blockchain technology. That powers bitcoin is still in need of improvements. So long as no scalable solution is developed and bitcoin cannot fulfill its initial use case, speculators win. Speculators dictating value increases volatility, making bitcoin’s adoption as a payment mechanism more challenging.
Bitcoin cannot be used as a payment method
Bitcoin’s extreme volatility has hampered its use as a payment method. Leading to the rise of stablecoins. The argument is that a volatile payment cannot used in business. Businesses require predictability. Bitcoin, in its current condition, cannot also provide that stability, necessitating stablecoins.
Greed got in the way again.
Only a few stablecoins are actually in use. Stablecoins are mostly utilized on crypto exchanges to replace fiat cash or in decentralized finance (DeFi) applications. To earn larger returns than traditional saving techniques. Like bitcoin, they are not utilized for everyday retail transactions.
The 2019 announcement by Meta (previously Facebook). To establish a stablecoin sparked debate among regulators and a sense of urgency among states. It is to safeguard their sovereignty and develop a central bank digital currency (CBDC). While all nations are looking into and discussing cryptocurrencies, stablecoins, and CBDCs, their approaches vary.
In contrast, Japan recognizes bitcoin and other cryptocurrencies as legal property. And accepts them as payment methods. Another country’s position is uncertain, but it supports the European Commission’s proposed legislation on Markets. In Crypto Assets (MiCA) and the U.S. President’s Working Group. On Financial Markets (PWG) report on stablecoin regulation.
In a November address, Fed Governor Christopher Waller. He stated that “the US payment system the future of Crypto is undergoing a technological revolution.” He questioned the need for a CBDC. Claiming that “payments innovation and competition benefit consumers.” His remarks backed efforts by technological companies. And banking institutions to also establish stablecoin payment alternatives.
Everyone would use the same payment method and instrument
Waller noted that “in a perfect world. Everyone would utilize the same payment system and payment instrument.” He disputed such a scenario of a one-payment-system, saying “in our imperfect world. This would bestow monopoly power over the payment system”. Alluding to a centralized payment system or provider.
A “perfect world” is one in which no single entity has control over the payment system. It was designed to be a payment system “for the people.” As a financial asset also traded on crypto exchanges, bitcoin has lost its origins.
Regulators and policymakers seem to agree on the benefits of distributed ledger technology. For financial institutions and consumers worldwide. But they disagree on the use and applicability of DLT. Bitcoin, stablecoins, and CBDCs are likely to coexist. Albeit their significance and applicability may vary by country and location.
Cryptocurrencies are likely to be accepted.
Crypto payments cards from Mastercard are now available in Asia Pacific. Europe may prefer a CBDC. The UK and other Eurozone countries are hard at work on CBDC remedies. US prefers stablecoins or an equivalent to a digital USD.
Additionally, it will become the “rails” of all financial and economic systems and applications. To help ordinary consumers interact with these apps. Utility tokens and payment instruments like stablecoins or CBDCs may also used.
Applications like DeFi and non-fungible tokens (NFTs) will launched on decentralized blockchains. Using their native tokens (e.g. ETH, ALGO) to conduct platform transactions. While users will interact seamlessly with these applications using stablescoins. CBDCs, or credit/debit cards (crypto or fiat). These platforms will also be vital in the Metaverse’s evolution.