This will increase the price of Bitcoin soon

Bitcoin needs more users.

From 2012-2016, the fact that Bitcoin was a new, unproven technology brought in a group of computer scientists to experiment with it. From 2016-2018, it was the proliferation of digital currencies, the rapid increase in prices and the emergence of many new digital currency exchanges that attracted an audience of speculators. From 2018-2020 it was a bit quiet, but then DeFi summer happened and shortly after, and more importantly, NFTs took the world by storm, bringing more people who had never used a blockchain app or service before downloading a wallet and buying whatever coin or token they needed to buy NFTS.

In retrospect, it’s not a surprise that events like this lead to various bull markets, and “the number goes up.” On blockchain protocols, an increasing number of users, developers, apps and services and user activity on a platform are positive metrics that lead to success and value addition.

But now it seems that all blockchain protocols and digital asset ecosystems are experiencing a lull in both user activity and development. So what will be the catalyst that prompts individuals to create a digital asset wallet for the very first time or top up the wallet(s) they haven’t used in a while so they can experiment with blockchain-native projects again?

It will not be a business application…

In the short term, there is not going to be a B2B application that catalyzes the growth of a blockchain protocol.

The future of distributed ledger technologies will be B2B or B2C, and mass adoption at these levels will be achieved when engineers stop making coins, tokens and payments in digital assets part of the app or service user experience.

But that is the future, and right now we live in the present. Currently, consumers are driving the adoption of blockchain technologies and digital assets. In the past and today, they have been attracted to coins, tokens, DeFi and NFTs because these innovations have given them a chance to increase their wealth through speculation. Consumers will always be the first to experiment with blockchain and digital currency-based innovations because businesses, governments and regulators are lagging behind.

Businesses, governments and regulators have processes and systems that have worked for decades, sometimes centuries, and they consider these traditional systems to be safe, reliable money makers for their agencies and departments. When something relatively new like blockchain and digital assets comes along, businesses, governments and regulators usually don’t think these new innovations are worth their time and resources until an event takes place that makes them think otherwise.

That said, recent events have caused businesses, governments and regulators to turn their attention to blockchain technologies. Unfortunately, it has primarily been negative events that have caused them to do this: such as large digital asset service providers becoming insolvent and filing for bankruptcy, consumers losing a lot of money due to these service providers going under, and DeFi exploits resulting in consumers having their money stolen.

Although it was the negative events that got their attention, these events caused companies to put blockchain under the microscope. As they educated themselves on the technology, they learned and recognized that blockchain could positively impact the world, mainly regarding money transfers, payment settlements, digital identity and systems that benefit from increased transparency.

But still, even with awareness of the positive aspects, a small number of companies are just beginning to devote resources to blockchain-based research and development, and many more are not willing to spend time and energy on blockchain yet. It is becoming clear that most companies are not interested in building blockchain-based solutions from scratch and would rather acquire a blockchain-based product that is already on the market or source talent from a blockchain development company.

Long story short, I have ruled out enterprise applications as the factor that will drive protocol growth and adoption in the near term.

So what will it be?

In the near future, it will be financial institutions that bring the next target group of new users to blockchain applications. I also believe that this future will come much sooner than we think. Why? Because BlackRock, the world’s largest asset manager with $10 trillion under management as of January 2022, has partnered with Coinbase (NASDAQ: COIN ) and announced the launch of a spot BTC private trust. This means that BlackRock will soon start allocating part of its money to digital assets, which will most likely mean that institutional and accredited investors who have never owned digital currencies will give significant amounts of money to the fund to receive exposure to digital assets.

Additionally, BlackRock is a leader in its field, so BlackRock moving into digital assets will give other asset managers confidence that they should do the same. We’re already starting to see this play out, with billionaire hedge fund manager Steven Cohen announcing he would be setting up his own crypto-focused asset manager to trade spot digital currency and derivatives just days after BlackRock’s initial announcement.

Hedge fund billionaire Steven Cohen is reportedly setting up his own crypto-focused asset manager to trade spot cryptocurrencies and derivatives, per CoinDesk.

— unusual_whales (@unusual_whales) 12 August 2022

All of this will result in a gradual increase in the total market value of digital assets, meaning that many digital assets will increase in price over time, ceteris paribus.

What about consumer applications?

A new consumer application that prompts first-time blockchain users to download a wallet also has a chance to move the adoption needle. However, it is not yet clear what this will look like. I don’t doubt that developers are currently in the lab thinking about the next apps and services that will hit the market, but there’s no telling what shape or form they’ll take. As the last bull market drew to a close, it seemed like gaming to make money was going to be the app that catalyzed protocol growth and new user adoption. Unfortunately, most of these games were launched at a time when the market lost its appetite for most blockchain and digital asset ventures that required coins and tokens. Games to earn money that started to become popular may have some wind in their sails as the market bounces back, but I think it is more likely that new applications that have never been seen before will bring in new consumers since a lot of gaming -Earn- game had its chance and didn’t go far.

Final thoughts

In summary, I have said that we have a new round of digital asset speculation coming, and that it will come in the not-so-distant future. It has been confirmed that financial institutions will allocate client money and percentages of their funds to digital assets, and this will bring new money into the digital asset markets, which will increase the overall market capitalization and the number of players in the industry, two factors that historically have led to the increase in value of coins and tokens.

The only factor that I can think of to disrupt this trend would be if the month-over-month inflation data – the CPI report – in the US comes in higher than expected over the next six months, because if that happened, it would get the Federal Reserve to raise interest rates at a pace that the market has not priced in, which will put a certain selling pressure on shares and risk assets.

A wild event that I think would spur protocol growth at an even faster rate than expected would be if a new consumer-facing application or concept hits the market, but right now no such app or service is in sight.

And finally, enterprise and business applications of blockchain technology are inevitable in a variety of industries. However, businesses are risk-averse laggards who are not as willing as consumers to experiment with new technology. For that reason, the future of B2B/B2C is probably further away than we think. Additionally, businesses are not going to want to use coins and tokens, so for blockchain-based business applications to be taken seriously, they really need to be more efficient than the solutions and operations that already exist, and coins and tokens should not be part of the experience.

See: BSV Global Blockchain Convention panel, The Future World with Blockchain

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