In Search For Crypto clarity
By Frank Schuil on ALTCOIN MAGAZINE
This week I was fortunate enough to spend time with some of the leaders in the cryptocurrency space at Digital Currency Group’s private Founder retreat at Lake Tahoe. It was a great time to reflect on how far the industry has come and what is on people’s mind for the period ahead.
Last year the event was held in the middle of the ICO craze and for many of us it was something we didn’t really see coming at this scale, even though some of us participated in the first ICOs ever — like I did. We spent considerable time talking through token economics and legal pitfalls while enjoying the gold rush that as expected lasted briefly.
This year everyone is building for what’s to come while we ponder what will drive the next bull market and when it will happen. At this event there is one community of openminded people trying to learn from each other and teach each other to the benefit of all. There was a time when this was the norm.
Before 2014 there was one community with a single objective to make cryptocurrencies succeed. Now there are fractions that pursue their interests to make their blockchain or cryptocurrency project succeed, often at the detriment of other people or projects. This zero-sum game mentality has cluttered the conversation and makes it harder to predict the future — or at least for me.
Here is a list of questions that I find hard to answer
- Will the next bull run again coincide with the Bitcoin halving?
Clarification: Bitcoin has always been the leading cryptocurrency that set the tone for the wider market momentum. When the supply of cryptocurrency is halved while the demand stays the same or increases, it pushes the price up. In 2016 we had the last halving with a bull market following in 2017. If the patterns repeats we would see a 2020 halving followed by a 2021 bull run. While this has historically been the case, we see some cryptocurrencies disconnect from Bitcoin’s volatility and if we would get a new leader they may set the tone and in a different timeframe.
2. Has Bitcoin secured the store of value use case?
Clarification: In 2013 we thought we’d soon be spending bitcoins to buy our coffee. This has not happened and is likely not going to happen soon. Meanwhile Bitcoin has proven itself to be a store of value in unstable economies with hyperinflation. People argue that the difficulty to force protocol changes indicates stability of the protocol —remember the segwit battle. Meanwhile we are seeing institutional interest gravitate to Bitcoin. Counter-arguments are made that if Bitcoin isn’t adopted more widely as money it will not be a store of value. Bitcoin Cash and projects like OmiseGo and Request Network aim to take advantage of this (perceived) gap.
3. Will Ethereum be able to scale in time to keep others at bay?
Clarification: With the arrival of Dapps and projects launching on top of Ethereum, we saw the protocol experience some hiccups. Meanwhile timelines for scaling shifted while new blockchain projects promise scalability. Some of these are extremely well funded with growing communities. If Ethereum manages to scale in time and in the right way it may solidify its position and as some believe even take a shot at the store of value use case, i.e. Bitcoin.
4. Will we see a wave of ICOs on top of Bitcoin with the launch of RSK or is Ethereum the unbeatable standard?
Clarification: The ICO market was entirely dominated by Ethereum as RSK was not ready when things took off. This left no other option than to launch a token on top of Ethereum for most. Companies like Coinbase have made no secret of their support of Ethereum, taking their time to implement things like Segwit while launching a token browser. Meanwhile RSKs development has come a long way while other cryptocurrencies like BCH are planning their own ICO capabilities and dedicated platforms for STOs emerge.
5. What does adoption mean and which metric is the most important one to follow?
Clarification: The question of how to measure success contested. Whatever metric you pick there is always someone arguing that it’s comparing apples to oranges. For instance, a transaction on one protocol means something different than on the other and transactions can take place off-chain that slip through the measuring cracks. User adoption could be measured by wallet addresses, user sign ups or active users and companies disclosing figures often limit themselves to one while some count double. Development activity can be measured by amount of developers or code commits — but how do you measure quality? For trading volume the question is which exchange to include or not — how much of it is manipulated / what part of it is flowing through decentralised exchanges or OTC? More websites are coming online focusing on one of these metrics, whether it’s development activity, sentiment or volume. The overall picture can still remain unclear.
6. Have we won the fight or are we just at beginning to see real resistance?
Clarification: On the one hand we are seeing trading desks and custodian solutions from companies like Goldman Sachs and Fidelity and large corporate blockchain partnerships making headlines. On the other hand we hear stories of cryptocurrency businesses losing their bank accounts and Central Banks intervening or controlling the cryptocurrency market. In many ways our market has come much further than any of us ever dared to dream. Meanwhile conditions seems to improve and digress simultaneously in different areas.
7. Is there room to unite the wider cryptocurrency community or is it a lost cause?
Clarification: The infighting in the cryptocurrency market took extreme forms. The Bitcoin block size “debate” was arguably one of the most vicious battles we have seen where some involved even received death threats. The different groups of stakeholders (miners, developers, companies and users) with individual preferences and economic incentives created a toxic environment. Now that forking a protocol is an acceptable practise — or so it seems, it has allowed fractions to co-exist independently. As such, there might be room to start bringing communities back together again to the benefit of the overall market. There are already some cross-blockchain projects and collaborations between parties that are promising. Without these efforts it will be difficult to decide on which protocol to build on and what features to prioritise. This causes delay in overall adoption.
Words of encouragement
After spending most of 2015 explaining to bankers why decentralised blockchains and cryptocurrencies are more important than their private blockchain initiatives, I’m very happy to see that I rarely am today. People are building some really cool stuff and incumbents are listening and paying attention — even participating. The steps to mass adoptions are fewer and smaller than a year ago and there is clarity of what cryptocurrencies and blockchains can do for us as a society. There are more apps, tools and protocols being developed today than ever before. I can’t wait to see how far we have come next year.
And for the comment-hungry out there, feel free to answer my questions above.
Before moving on, make sure to press follow, leave a clap or 46, share today’s highlight and if you missed the last article, click here.
Follow us on Twitter, InvestFeed, Facebook, Instagram, LinkedIn, and join our Discord.
The purpose of ALTCOIN MAGAZINE is to educate the world on crypto and to bring it to the hands and the minds of the masses. This article was written and composed by Frank Schui on ALTCOIN MAGAZINE.
