The Cryptocurrency Industry Is Rapidly Changing; Is Bitcoin Beginning To Get Lesser Attention?
There was a time when the industry was focused solely on Bitcoin, but now it’s moving toward the development of scalable and secure decentralized blockchain products.
Where It All Began.
Satoshi first proposed a peer-to-peer, decentralized payment system that anybody anywhere might utilize in the Satoshi white paper in 2008. A universal currency was thus created without the need for intermediaries, and it gained acceptance globally.
See also: How do cryptocurrencies work? Beginner’s Guide To Cryptocurrencies.
Over the years, Bitcoin’s original purpose has faded a little. As opposed to its original intent, which was to serve as a means of payment, bitcoin has evolved into an investment vehicle, a store of wealth, and even a form of digital gold.
In the wake of the 2008 financial crisis, some of the early Bitcoin adopters were evangelists who wanted to change the world and create a new global financial system. Most of those who participated in this activity, however, were speculators who were hoping to make a quick buck.
Speculators drove up the price of Bitcoin when it first started trading on cryptocurrency exchanges as a financial instrument. How far it has evolved from its basic economic use case — as a payment method — to a speculative financial instrument is demonstrated by this fact.
Bitcoin’s acceptability as a global payment method
For Bitcoin to be generally accepted as a payment method, analysts have concluded that it must be scalable or extendable enough to support countless seamless transactions.
Bitcoin is still in its infancy, but technologists are continually searching for ways to improve its scalability. Since bitcoin hasn’t yet been able to overcome its scalability issues to serve its original purpose to the fullest, speculators currently have the upper hand. Bitcoin’s acceptance as a payment method becomes even more difficult when speculators determine the price.
See also: What Gives Cryptocurrencies Their Value?
Stablecoins are becoming more popular.
It has become increasingly difficult for Bitcoin to be utilized as a payment mechanism because of its excessive volatility, which has led to the creation of stablecoins. The claim is that a payment system that is prone to volatility is unsuitable for business transactions. To be successful, businesses demand a level of regularity and predictability.
Stablecoins are needed since Bitcoin is unable to deliver that stability in its current form. Only a few stablecoins are now in use, despite the fact that many have been launched. On crypto exchanges and in decentralized finance (DeFi) applications, stablecoins are commonly used as a substitute for fiat currency or as a way to earn attractive returns on investments.
As a result of this, they are not widely accepted as a form of payment in the retail sector.
There has been a dramatic rise in CBDCs.
Although every country is looking into and debating the use of cryptocurrencies, stablecoins, and CBDCs, the approaches taken by these countries vary greatly. Japan acknowledges bitcoin and other cryptocurrencies as legal property and accepts them as payment methods, whereas China is building its own CBDC.
It’s unclear whether other countries will regulate cryptocurrencies and stablecoins. Still, the European Commission proposes a regulation known as “MiCA” that would outline the regulatory landscape for cryptocurrencies. The US president has established a working group to outline the regulatory landscape for stablecoins.
See also: Bitxmi Introduces Gold and Silver Backed Tokens.
The benefits of distributed ledger technology (DLT) appear to be agreed upon by regulators and policymakers worldwide. They differ, however, in their assessments of the practicality and usefulness of DLT. All three forms of digital currency will likely be used in the same way, although their use and importance will differ from country to country and region to region.
The Future Of The Crypto Industry
DLT and blockchain technology will continue expanding and becoming the “rails” of all financial and economic systems and applications. The United States likely prefers stablecoins or an equivalent over a digital dollar. Stablecoins and CBDCs, for example, will likely coexist with utility tokens as payment instruments, making it easier for everyday users to transact with these applications.
Decentralized blockchains will be used to build new applications like DeFi and non-fungible tokens (NFT), allowing users to pay using stablecoins, CBDCs, or credit/debit cards the same way they do with their smartphone apps. The development of the metaverse universe will depend on these platforms.
Summary
Cryptocurrency is no longer the only focus of the industry. Programmers are now developing decentralized blockchain technologies that are both scalable and secure.
Speculators drove up the price of Bitcoin when it first started trading on cryptocurrency exchanges as a financial instrument. As seen by this, there has been a significant shift in its initial economic use case from a payment mechanism to a financial instrument. Because of its tremendous volatility, Bitcoin has been unable to be utilized as a means of payment.
The use of cryptocurrencies, stablecoins, and CBDCs will very probably coincide. Utility tokens and payment instruments will be separated in the future.
