Has BTC met expectations after almost 14 years?
Bitcoin: Freedom, supported by real-world tools, and a solid tokenomics will enable the fulfillment of Bitcoin’s original mission, said Jin Gonzalez, Chief Architect of Oz Finance.
When the world’s first cryptocurrency was born in 2008, most people hadn’t heard of it, and those who hadn’t understood it or turned it into a punchline.
Things have changed drastically since then. And not just the price of Bitcoin, which rose from a fraction of a penny to close to $70,000 in November 2021, and back to around $20,000 in recent months. This exciting period saw new industries grow, expand and spawn other sub-industries.
Bitcoin has been the driving force behind it all, establishing itself as the reference store of value and means of exchange with over 81 million wallets. Yet it is becoming increasingly clear that the world’s first cryptocurrency has yet to live up to its promise of global adoption as a functioning legal tender, or as an inflation hedge.
In addition to failing to achieve widespread adoption as a functioning currency, Bitcoin, or any cryptocurrency for that matter, has not provided the benefits and freedoms it was originally intended for.
Coming up short
In the early days of Bitcoin, staunch proponents believed that the coin would offer complete discretion, privacy, security, and most importantly, financial independence. Despite the fact that there are still many hardcore Bitcoin believers, many began to realize that the public nature of Bitcoin does not ensure all this because it is quite easy to track transactions on the Bitcoin blockchain.
People are still taxed on profits realized on Bitcoin. The blockchain can be used to identify individuals and monitor transactions, and the ledger can be used as evidence against a person forced to submit their KYC. Subsequently, Bitcoin, and by extension all crypto, expanded its vision of freeing the masses from traditional finance into other uses. That is, as a hyper-secure and efficient transfer of value, a store of value, an inflation hedge.
Bitcoin and the stock market
It didn’t quite work out. Instead, it finds itself mimicking the stock market and technology stocks in particular, albeit with a higher degree of volatility. This does not bode well for those who tried to diversify their portfolios in defense against exploding inflation. The current ongoing market downturn has exposed Bitcoin as not truly independent of the mainstream financial world. This is because the fluctuations are in lockstep with international markets.
Bitcoin actually got another chance to prove itself as a working currency when El Salvador became the first country to pass legislation making Bitcoin legal tender. But even after that, many businesses in the country of El Salvador were unable to accept Bitcoin for a myriad of reasons. And this is on top of a laundry list of other problems plaguing the Bitcoin launch in the small Central American nation of six million.
El Salvador’s half-baked launch of Bitcoin so far has not yielded the results many residents and Bitcoin evangelists hoped for when the historic announcement was made last summer. Given the idea that Bitcoin has not provided the fundamental freedoms it sought to enable, do cryptocurrencies have a real future ahead?
If not Bitcoin, then what?
Crypto has staying power, and this bear cycle has enabled an industry-wide shift that has refocused its emphasis on construction. The previous bull cycle put too much emphasis on token launches and hype. But not enough to build actual products and services to support the token’s value. This is being corrected as we speak, but the industry still suffers from a lack of real utility.
Crypto and blockchain projects need to take a different path than they have been. Instead of rushing to pump a new hyped-up token into the oversaturated market, the focus should be on how to provide the benefits that Bitcoin and blockchain originally intended. This means providing financial freedom through privacy, balanced regulatory coverage and a fair tax regime. Now, neither Bitcoin nor any other major token or cryptocurrency really provides this.
Web3
Crypto and the larger Web3 community is still full of potential. But to ensure that this bear cycle pays off, the main priority must focus on the freedoms of privacy, regulation and tax protection. These freedoms, supported by the real world, and a solid tokenomics will enable the fulfillment of Bitcoin’s original mission.
An ideal token should think big but act local at first, which means getting recognition and regulation from a national or regional government before expanding or doing an IDO (initial DEX offering). Legal reviews and smart contract audits can be leveraged to provide transparency and build credibility. This lays the foundation for legal boarding in a structured environment with proper regulatory coverage.
Crypto projects need to wake up and realize that Bitcoin has fallen short. If the industry is going to spur a financial revolution and lead us into a Web3 future, it needs to be done with a coin that provides more than just speculative hype. A crypto industry that prioritizes developing and innovating new products and services while offering these freedoms will indirectly benefit Bitcoin as it will benefit the entire crypto ecosystem. Going forward, it’s important that we support projects and use cases that translate into the real world, otherwise this bear market will never go dormant.
About the author:
Jin Gonzalez has established six startups over the years, including two successful exits. Before the foundation Oz, a digital asset project aimed at connecting a network of Special Economic Zones across the globe, he was responsible for pioneering the adoption and embrace of blockchain technology at Union Bank of the Philippines, as their Director of BD, Fintech and Blockchain. Gonzalez is also the executive director of the Distributed Ledger Association of the Philippines.
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