CRYPTOCURRENCIES ARE INEVITABLE
INTRODUCTION
After the recent approval of the Bitcoin Spot ETFs, Bitcoin firstly and consequently in a certain sense all the other Cryptos have gained a certain degree of legitimacy. Bitcoin is now accesible to everyone, wrapped as an ETF, to make it look like a traditional investment. What I'm trying to say is, that it can now officialy be part of your pension fund. But, all of this, hasn't stopped much of the main stream media, taking advantage of the small dip post approval, to post many articles questioning Cryptocurrencies possibilties to survive. This, adds to many common people still questioning the utility of a decentralized currency.
So, I decided to write this article to tell you why Cryptocurrencies are here to stay, but since there are already many simular articles, I want to take a different approach to it this time. This is, because most of this type of articles tend to give for granted that our current monetary system is about to fail, and Cryptocurrencies are seen as the best option to substitute it. Instead, I want to tell you how Cryptocurrencies are inevitable also in our current FIAT monetary system. Why we will use them, why big companies will incorporate them in their services, why Wall Street can't wait to use them, why the banks will be forced to adopt them and why finally also the central banks will have to surrender and add them to their reserves. And at the end, I will also analise how Crypto can help if a collapse of the current monetary system really does happen, and why they will be the most obvious choice for the next one.
IT NEVER WAS SO SIMPLE
In many African and South American countries, Cryptocurrencies are already used a lot, both as an investment and for transactions, but the reasons there are obvious. From authoritarian regimes, to hyperinflation or the simple fact that other types of investment are often unavailable to common folks. It might surprise you to know, that also in many western countries, it's the most used investment, which means that people rather invest in Crypto than Stocks or other TradFi products. This, is not just because of the ease of use and accesibility of the crypto space, but also because of the fact that Cryptos give you access to financial instruments that the smaller investor never had access to before.
But, let us take a step back, many when analyzing the ease of use and user interface of Cryptos ecosystems, they tend to make the comparisons with the main internet apps currently, like Amazon, Google, Instagram... But, in most cases this makes no sense, the true comparison should be made with TradFi, and as we'll soon see Cryptocurrencies are light years ahead.
Let's start from payments, although they might be the most controversial ones, this because many could argue that there are already other solutions that allow you to pay by simply scanning a QR code. That might be true, but those methods don't allow you to verify the actual completion of the transaction. In Crypto instead, thanks to the Blockchain, we can verify the completion of the transaction as soon as the block that contains it, is confirmed. This differs from the other methods, where the transaction has to go through various steps and various financial institutions, before it's truly confirmed. Although, I can understand why it doesn't really seem that innovative to many people, in the end of the day the transaction looks instantly approved in both cases.
Let's move forward, to the things that really put Crypto way ahead of TradFi. The first one is, access to Financial Services that we never had access to before. In fact, thanks to Decentralized Finance (DEFI), that we could define as a sub category of Crypto, we can interact with various Applications that offer financial services that were for a long time either hard or impossible to access for smaller investors. We're talking about services like DEXs, where we can participate in providing liquidity to help the exchange between cryptos, and consequently earn a portion of the fees from the various swaps. Then, we also have Lending and Borrowing services, where we can lend out our money and earn from the interest people pay to borrow it. Yes, you can also do it through a bank, but here, it takes a few clicks and you can earn much more. And from here, there are many other type of Financial services getting more and more complex, all the way to Financial services that didn't even exist before, created thanks to Blockchain technology. The easiest example of one of these could be, Staking. Where by locking your Crypto for a predetermined amount of time, you can participate in the governance and security of the chain you've chosen, thus earn a portion of the transaction fees and from the inflation, if there is any.
The second thing, is the incredible ease with which you can invest in new Start Ups. How many times have you heard: "If you had invested in <<Random Company>> right after their creation, today you would be a milionaire". Great, now thanks to Crypto you can. No, not becoming a milionaire, but investing easily in newly born start ups, and maybe if you make great picks become a milionaire. But, let's find out how. If you would have wanted to invest in a small start up in the past, you had to know the right people, had a decent amount to invest, sign lots of documentation, ask for specific permits... Now, with crypto, we just have to enter a site dedicated to Start Ups (often a so called "Launchpad"), or directly the site of the project, decide how much you want to invest (often 1$ is enough) and finally confirm the transaction in your wallet. Of course, we're talking about Crypto Start ups, so they're all digital, but let's be real what start up isn't digital these days.
At this point, some of you might be saying: "Great, but you talked about ease to invest, and only talked about Crypto related investments". Although, I'm of the opinion that soon even the biggest companies will have crypto components, this last point might be for you. In fact, after the Bitcoin ETF approval, we're preparing for the Ethereum ETF possible approval, and with it of the inevitable tokenization of TradFi assets. Yes, I said inevitable, cause it's not a matter of if but of where, a private blockchain or a public one? But, let's understand what we're talking about first, it's about bringing TradFi assets on various Blockchains, thus making them accesible and available globally much easily and also tradable 24/7 (not sure this is a positive thing...), plus on a public blockchain all transaction would be visible. Although, I just argued why a public blockchain would be great from our perspective, let's see why it's convenient also for big institutions. Imagine if it would be a Private blockchain, it would be controlled by a single entity who would be the only one able to see the transactions, plus you'd have to trust this entity. Why would a different big institution trust a product made by one of its competitors?
Although, some might try to create a private blockchain for tokenization, in the end they will all use a public blockchain for it.
RISK MORE
The last couple of years in the markets, have been characterized with a volatility that hadn't been seen in many years and very unexpected price movements, to say the least. This, in part was due to Covid and various wars, but mostly because of the very poor monetary managment from the biggest central banks, which led inflation to rise above 10%, levels not seen in a very long time in the western world. For an investor, this means that he needs to take more risk than before, because to consider himself profitable, his returns need to beat the inflation levels. This led some of the biggest companies to insane valuations. Although, for now inflation seems to be cooling of, we are going towards a future that will give the central bankers many reasons to print money uncontrollably. I remind you that this happens because we put our own money in the hands of few individuals, and that's one of the reasons Bitcoin exists. Since, the trend is deemed to continue, I don't see how the next assets to attract the big investors won't be Cryptocurrencies. Think about it, some of the biggest companies in the world don't produce anything tangible or real, Meta (ex Facebook) doesn't even offer something usefull to humanity in any way... I'm not trying to say, that they're useless companies, but simply that their valuation is way higher than what it should be. If we take out Bitcoin, that is of the same if not greater importance than gold, which would justify a pretty high valuation. I expect, many Cryptos to soon find themselves in a simular situation as the one, big tech companies are in today, with higher valuations than what they should be. Just look at Dogecoin, which is probably the best example of it. What I'm trying to say is, that both small and especially big investors, will have to invest in Cryptocurrencies if they want to beat inflation.
DIGITALIZATION DONE RIGHT
At the beginning, I talked about how the comparison with Apps like Amazon or Instagram doesn't make sense in most cases. Well, let's talk about those cases, cause blockchain technology allows also for the creation of decentralized versions of Social, Iot, E-Commecrce, Gaming... applications.
The fact, that soon every transaction will be conducted digitally, is something that nobody doubts. What we should ask ourselves is, if that will happen with a digital currency created by governments and central banks or with a decentralized Cryptocurrency. Although, initially some might fall for using a centralized digital currency for in person transactions, I see it very difficult that it will happen for most of the digital ones. That's because, the central banks are working on their digital currencies with the idea of replacing phisycal cash, but not with the digital economy in mind. Why would users use a inefficient service controlled by a third party? When they can use a Cryptocurrency tailored for a specific application, of which they can check every single carachteristics. The choice will be obvious, why trust a currency made by a group of people whose average age is above 50, who have no idea of the needs of the people. When you can choose currencies made for the internet world, with their users in mind, on which you have voice on its changes and updates.
And this leads me to my second point on Digitalization, as we're seeing the internet is becoming more and more centralized by the day, with the biggest socials & Co, partering with governments to decide what can and can't be showed on their platforms. And with a uncertain future, this might get even worse. Furthermore, we're owning always more objects digitaly, but we're slowly learning that they're not really ours and that the company that issued them can take them away from us at any time. All of this, makes simular applications but on blockchains, the most logical way to fight this issue. Imagine, if you could really own your social media contents, your own data that is right now being constantly sold by various companies, your thousands of videogame objects...
But, I can imagine, this might not be completely logical, so I'll make you a real world example. Recently the European Commision has approved the Digital Services Act, which among its various points includes censorship of "misinformation", but who decides which information are correct and which aren't? My point is, that only who is losing control, needs to control information. And the fact that Information is being controlled, is already obvious right now. This, will in the future lead people to look for decentralized alternatives created thanks to blockchain technology, where the regulator has no specific entity to command, and where information flows freely. And not just that, information can be verified by everyone, and through a Token governance system, users will be able to democratically remove unnecessary contents.
THEY WILL GIVE IN
At this point we have more than justified why small investors, small and big companies, Wall Street, investment funds and others will end up adopting Crypto. What you might still not get, are the reasons why even banks will be forced to use them. But if you think about it, it's only logical. Central Bankers tell us that banks will keep on existing, even when their digital currencies will be in full force. But why would they possibly mantain something that at that point would be completely useless? That's the reason why banks won't just adopt Crypto, but they will do it willingly, to survive. Actually, they already are, with participations in the Bitcoin ETFs, many projects about tokenization of TradFi assets and many other Crypto related projects. I mean, some even partnered with The Sandbox, to bring their services to the Metaverse...
And finally, when this whole process will be complete, the only entities left without Crypto will be the Central Banks, and at that point they won't have any other option then to adopt them and add them to their reserves.
WHAT IF IT ALL COLLAPSED
Up to this point, we have analyzed how Cryptocurrency would do extremely well even in our current monetary system. Now, let's take a quick look on why they would be the protagonist of a change in the monetary system. I want to avoid as much as possible to speculate on how it would happen, and focus more on why Crypto would be chosen, no matter the conditions. The monetary history of the world is characterized by a succession of debt cycles. They start with the usage of a strong currency, in the past usually gold, and they end with the total devaluation or abandonment of it, in the past by diminishing the quantity of gold in the coins, now by moving to a completely unbacked currency. And once, everything inevitably collapses, it all begins from scratch, once again. Although, I can't gurantee that Cryptocurrencies will end this cycles, they sure can start them. That's because when it will come down to choosing the strongest currency once again, Bitcoin will be the only logical option, scarcer than gold and definetely more suited for todays and the futures digital ages. It will then be up to us to end the cycle, without falling into the usual temptetion to externally devalue our currency.
CONCLUSIONS
Doesn't matter if you can see it or not, we will all end up adopting Cryptocurrencies, they're here to stay, and when you'll get it, I'm already here waiting for you. In the end of the day, everyone buys at the price they deserve.
What I'm trying to say is, imagine not being in Crypto in 2024... Couldn't be me.
P.S. Remember to not price your Crypto in FIAT terms, that's not where we're going.
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