Why cryptocurrency utility is making it less alternative
By Maxim Shilo, Head of Trading at CoinLoan
It was not so long ago that cryptocurrencies were dismissed by those who saw themselves as informed and financially aware; relegating the whole concept as little more than a Millennial experiment being embraced by generation Z. This dismissive approach by those who think they know better would be fine if it wasn’t for the inconvenient truth of the increasing acceptance of the concept and ease-of-use, with alternative currencies becoming more mainstream.
Many investors, traders and savers, along with financial institutions, now using the crypto sector are split in terms of the sector’s development and projected evolution. While many early adopters rail against the sector gaining wider acceptance and feel regulation is against the whole ethos of “their” alternative marketplace, there is an increasing number who welcome the potential stability and security that regulations will bring. Recent years have seen the sector being used by businesses to conduct commercial transactions using cryptocurrency. At the start, this may have just been a fashionable marketing gambit, but this has now morphed into a legitimate and recognized method of payment. And this brings me to my main point, the old saying “if it walks like a duck, quacks like a duck and swims like a duck — it’s a duck”. The same can now be said of the leading cryptocurrencies – if it performs like money, is valued as money and can be used to transfer value — then it is a form of money. The leading cryptocurrencies have become legitimate, not through their wild price swings, but through their utility.
A potential future for crypto as not only a legitimised currency but the de facto currency of the public at large can be sketched from the imprint left by the rise of the internet over these past three decades.
Early iterations of the internet were used by few and dismissed as a passing fad by many. It wasn’t until the invention of the world wide web and web browsers in the 1990s that mainstream society slowly started paying attention and, critically, invested in dot-com companies. The resulting bubble, which peaked in March 2000, and the subsequent crash in 2002, which wiped out dozens of successful online companies, almost perfectly mirror the history of bitcoin since its inception in 2008. After a decade of slow build-up, the bitcoin bubble of 2017 finally burst in 2018, leading to a crash which then tanked the value of other up-and-coming cryptocurrencies. But, just as enthusiasm for the internet recovered, so too did early investors’ belief in the power of crypto.
It took about fifteen years for the internet to become not only widely accepted but fundamentally integrated into society to an inextricable degree. In 2006, both Facebook and Twitter launched for the public, and our relationship with the internet has not been the same since. I would argue that the same is currently happening in the realm of cryptocurrency. The current debate around regulation, investment firms expanding into the crypto sector, and the introduction of cryptocurrency into the larger cultural consciousness, all point toward this same fundamental shift occurring for cryptocurrency within the next few years. Further, just as the internet is arguably progressing into “web 3.0” as marked by Facebook’s rebranding as Meta — an ethos which at its core is the promise of a more complete integration of the physical into the digital — we can predict that a similar shift may occur (and may in fact already be occurring) with our concept of currency.
This shift from the physical to the digital has been happening for years in terms of our social spaces, but it can also be seen in crypto’s shift away from physical currency. While the gold standard was abandoned by governments years ago and fiat currency has been the norm for a while, we have up until recently always attached value to a physical object, be it gold, coins, or bills. Cryptocurrency does away with this: now data itself is the thing which is valuable. Value, and by extent legitimacy, is determined by utility: crypto’s acceptance as currency is dependent upon its usefulness. And in a society that is increasingly digital, a currency which reflects this brave new world is arguably inevitable.
This evolution isn’t straightforward, nor is it guaranteed to be adopted by all. For proof of this, just think about your parents or grandparents as they try to navigate online spaces. Some have kept up with the changes and readily adapted, some simply couldn’t, while a few take pride in their obstinate refusal to learn new technologies. There will always be those who continue to use and rely on what they know, whether it’s your aunt steadfastly refusing to try a social media platform other than Facebook, or a generation of investors who refuse to look beyond the traditional banking system. But progress doesn’t stop. It marches ahead, and if you don’t want to be left behind, you must be willing to move with it.
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