“Bitcoin: Freedom, backed by real utility, and robust 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 had not heard of it, and those who didn’t understand it or made a punch line.
Things have changed drastically since then. And not just the price of bitcoin, which has gone from a fraction of a penny to almost $70,000 in November 2021 and back to around $20,000 in the last few months. During this exciting time, new industries have grown, expanded and spawned other sub-industries.
Bitcoin has been the driving force behind all of this and has established itself as a benchmark store of value and medium of exchange with over 81 million wallets in existence. Still, it’s becoming increasingly clear that the world’s first cryptocurrency has yet to fulfill its promise of gaining global acceptance as a working legal currency or as a hedge against inflation.
Aside from not achieving widespread acceptance as a working currency, Bitcoin or any other cryptocurrency has not offered the benefits and freedoms they originally intended.
come up short
In Bitcoin’s early days, staunch supporters believed that the coin would offer complete discretion, privacy, security, and most importantly, financial independence. Although there are still many die-hard bitcoin believers, many began to realize that the public nature of bitcoin does not ensure all of this, as it is fairly easy to track transactions on the bitcoin blockchain.
People are still taxed on the profit made from bitcoin. The blockchain can be used to identify people and monitor transactions, and the ledger can be used as evidence against a person being forced to submit their KYC. Then Bitcoin, and with it all cryptos, expanded its vision of liberating the masses from traditional finance to other use cases. That is, as a hyper-secure and efficient transfer of value, as a store of value, as an inflation hedge.
Bitcoin and the stock market
That didn’t quite work out. Instead, it mimics the stock market, and technology stocks in particular, albeit with higher volatility. That doesn’t bode well for those who have been trying to diversify their portfolios to weather skyrocketing inflation. The current ongoing market downturn has shown that Bitcoin is not truly independent from the mainstream financial world. This is because its fluctuations are in step with international markets.
Bitcoin actually got a second 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 could not accept Bitcoin for myriad reasons. And this is at the top of a long list of other issues plaguing Bitcoin adoption in the tiny Central American nation of six million.
El Salvador’s immature bitcoin launch has so far failed to produce the results many citizens and bitcoin evangelists were hoping for when the historic announcement was made last summer. Given the notion that bitcoin doesn’t offer the basic freedoms it intended to enable, does cryptocurrency have a real future?
If not bitcoin, then what?
Crypto has staying power, and this bear cycle has enabled an industry-wide shift that has put the focus back on building. The previous bull cycle placed too much emphasis on token launches and hype. But not enough to develop actual products and services to support the token’s value. This is being corrected, but the industry still suffers from a lack of practical utility.
Crypto and blockchain projects have to take a different path than before. Rather than quickly pumping a new souped-up token into the oversaturated market, the focus should be on how to deliver the benefits that bitcoin and blockchain originally intended. This means financial freedom through privacy protection, balanced legal protection and a fair tax system. Now, neither Bitcoin nor other major tokens or cryptocurrencies really offer this.
Web3
Crypto and the larger Web3 environment are still full of potential. But to ensure this bear cycle produces results, the top priority must be on privacy freedoms, regulatory and tax protections. These freedoms, backed by real-world utility and solid tokenomics, will enable Bitcoin’s original mission to be fulfilled.
An ideal token should think big but act locally from the start, which means gaining recognition and regulation from a national or regional government before expanding or conducting an IDO (Initial DEX Offering). Legal reviews and smart contract audits can be used to create transparency and build credibility. This creates the basis for legal onboarding in a structured environment with appropriate regulatory coverage.
Crypto projects need to wake up and realize that bitcoin has fallen short. If the industry is to fuel a financial revolution and usher us into a Web3 future, it must be done by a coin that offers more than just speculative hype. A crypto industry that prioritizes the development and innovation of new products and services while offering these freedoms will benefit Bitcoin indirectly as it would benefit the crypto ecosystem as a whole. Going forward, it is imperative that we support projects and use cases that are implemented in the real world, otherwise this bear market will never hibernate.
About the author:
Jin Gonzalez has founded six startups over the years, including two successful exits. Prior to founding Oz, a digital asset project aiming to connect a network of special economic zones around the world, he served as Director of BD responsible for the adoption and adoption of blockchain technology at Union Bank of the Philippines. Fintech and blockchain. Gonzalez is also Executive Director of the Distributed Ledger Association of the Philippines.
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