As Bitcoin heads for the obituaries, cryptocurrencies can finally mature
A dizzying number of mostly youthful folks have been proclaiming all manner of “paradigm shifts” recently. “Cryptocurrency is the future!” they exclaimed, while congratulating one another on their astute investments.
I am in no sense a digital native, having been born back in the heyday of transistor radios and televisions with three channels. However, having long since adopted the latest technology I see myself as a member of the BALD (“Born Analogue Living Digital”) generation.
Financial technology has been coursing through my veins since I first encountered the World Wide Web in 1994 via a clunky dial-up browser. Cynics such as Michael Bloomberg grabbed headlines deriding delays upon “the World Wide Wait” but the primaeval interweb struck me as the future for commerce and communication.
The internet of 2000 was a thing of fascinating excitement, vast hype and arguably little actual coherent execution. It lacked the kind of interface that would have made most users comfortable. Meanwhile the dotcom bubble involved staggering valuations with investment fixated upon pixelated sunny uplands.
The bursting of the dotcom bubble left a chaotic aftermath. Many first movers moved all the way into bankruptcy. Investors reverted to more analogue climes. True believers returned to their basements for several years before emerging blinking into the light with upgraded “Web 2.0.”
The digital landscape evolved rapidly and by late last year, an enthralled Bitcoin community confidently expected the crypto poster child to reach infinity and beyond. Half way through 2022 the outlook is exponentially more sanguine. The true believers still huddle in chat rooms aspiring to a six figure Bitcoin price resurrection. The reality is Bitcoin has lost 70 per cent of its value, creating widespread carnage in the broader cryptocurrency ecosystem. Several cryptos pegged to fiat currencies (“stablecoins”) have proven oxymoronic: turning to digital dust. Various exchanges are teetering on the edge of the bankruptcy abyss.
The internet was declared dead soon after the turn of the millennium but it bounced back. However, Web 2.0 was far from the same Web we knew last century. Pets.com, an enterprise headquartered in San Francisco that sold pet supplies and became a symbol for the dotcom bubble, disappeared amongst other famous URLs, never to reappear. A new generation of innovators built the Web 2.0 we came to know, love and most importantly, use easily every day.
Cryptocurrency is no different. We must salute Bitcoin as the gateway drug of digital money. The first blockchain generation of electronic money established a whole ecosystem. In this respect, Bitcoin is to money what the Model T Ford was to transport. Not the absolute pioneer but the model which had sufficient ubiquity to nudge civilisation to embrace it in scale. Thus the “Tin Lizzie” car, as the Model T was known, prompted municipalities to pave their country roads to encourage visiting motorists. Farmers began selling vegetables by the roadside which led in rapid succession to cafes and then drive-in restaurants along the route.
Bitcoin induced widespread adoption of cryptocurrency wallets as well as a means to pay for the currency: a base ecosystem which is being built today to power the future of cryptocurrency with the equivalents of paved roads and motorway services.
We have entered a long crypto winter, but one that will pass. In reaching “Crypto 2.0” we are going to likely say farewell, or see considerably less of last year’s household name currencies. Bitcoin already looks very Ford Model T compared to even slightly younger cryptos – it has issues with scale and speed, as well as being expensive to maintain pro rata to legacy financial instruments.
Perhaps there is one more rally to new highs to come, but the baton will soon be handed over to a new generation of much more modern, flexible, cheaper to use and scalable cryptocurrencies.
With the maturity of crypto 2.0, those “it’s a wild west” headlines will come to an end. Crypto is on the cusp of coming in from the cold and becoming mainstream. The embrace of historic money issuers delivering their Central Bank digital currencies (aka Stablecoins that prove stable within fiat paradigms) will encourage widespread adoption along with a user-friendly interface. Trust is also a vital step for the crypto renaissance. Coherent regulation which protects customers is at the epicentre of our digital future for money.
Cryptocurrency as we know it is dead. Cryptocurrency for the future is about to be born.