When the perpetually mysterious Satoshi Nakamoto, founder of Bitcoin, set out to build his own cryptocurrency, it’s fair to assume that he didn’t foresee where his creation would be just 10 years down the line.
This isn’t to say that the enigmatic developer didn’t have big plans for Bitcoin. After all, the aim of the digital currency was to ultimately overthrow the financial sector of the time. Instead, it became a capitalist dream—hurtling towards market values of almost $20,000 at its peak, before caving in on itself over the twelve months that followed.
Astoundingly, considering the unprecedented connectivity that we enjoy today, Satoshi Nakamoto has never been officially identified following the rise of his creation. Considering that he is rumored to own around 1 million Bitcoins that haven’t been touched—even during the cryptocurrency’s highest peaks—this has led to some investors to claim that Nakamoto died after founding his digital currency.
It would be quite something to hear Nakamoto’s thoughts on the ecosystem that he created. In the early days of Bitcoin, some adopters were keen to get the cryptocurrency up and running as a viable payment alternative—with some hip fast food places accepting the coin and a few businesses offering to pay salaries in Bitcoin.
Cryptocurrency startups established themselves in a bid to support transactions through Bitcoin. BitPay could’ve paved the way for the currency to be used to buy groceries or cinema tickets, but adoption wasn’t widespread enough to bring viability and Bitcoin began to mutate.
Last year, The Next Web found that 44% of all Bitcoin transactions are for illegal activities. Users found that Bitcoin was an ideal and untraceable currency for use on the dark web.
Writing for The Outline, Adrianne Jeffries said, “Nakamoto was a libertarian who wanted to create a system for payments that would circumvent governments, bankers, and corporations.”
He continued, “Instead, Bitcoin is now a get-rich-quick scheme that retains none of the exciting, anarchist features it proposed and has created a secondary economy with financial shenanigans that mirror the ones that led to the global financial crisis.”
It would be hard to classify Bitcoin as a failure, but it’s fair to say that the cryptocurrency has lost the soul it had as an emerging financial alternative off the back of 2008’s devastating financial crash.
There is, however, hope for the soul of the crypto-ecosystem as a whole.
2020 promises to be one of the biggest years for the world of cryptocurrencies. Stablecoins aren’t exactly new, but with the anticipated arrival of Facebook’s Libra and Wells Fargo Digital Cash, the volatility-free industry of stablecoins looks set to take centre stage.
Stability in the Face of Volatility
In December 2017, Bitcoin reached a value of almost $20,000; one year on it had dwindled to nearly $3,000.
As a digital currency that was designed to operate as a reliable alternate payment system, the success of the Bitcoin bull run in 2017 rendered the cryptocurrency unfit for its intended purpose.
Stablecoins, however, are pegged to real-world assets like the US Dollar or gold. Because of this, there aren’t any meteoric rises in value, but no crippling drops either.
Ethically speaking, stablecoins will be free from the clutches of speculators and profit-turning investors, leaving the digital coins to operate as they should—as a universal currency that can be used seamlessly beyond borders.
Stablecoins like Wells Fargo Digital Cash, Timvi (TMV), and Tether have been designed with convenience in mind.
When Wells Fargo announced its own digital stablecoin, the banking giants did so with an eye firmly fixed on enabling easy transactions. Lisa Frazier, head of the Innovation Group at Wells Fargo, boldly predicted that Digital Cash will be “faster than SWIFT, cheaper and definitely more efficient.”
Wells Fargo Digital Cash uses R3’s Corda Enterprise software to leverage swift book transfers internally—enabling funds to move seamlessly from a payer’s account to a payee’s account within the bank.
The true pace of Digital Cash remains to be seen, but if it is indeed faster than SWIFT, then it represents a step in the right direction towards utilizing crypto payments for everyday activities—like buying a coffee on the way to work.
Reaching the Unbanked
When Facebook announced Libra, its stablecoin that’s due to be released in 2020, it was done so from a humanitarian perspective.
Libra has been developed with the aim of reaching out to the unbanked citizens of the world. “For many people around the world, even basic financial services are still out of reach: almost half of the adults in the world don’t have an active bank account, and those numbers are worse in developing countries and even worse for women,” wrote Facebook subsidiary Calibra in a recent company statement.
Facebook, along with 28 other founding members of The Libra Association, including Visa, Mastercard, PayPal, Uber, Lyft, and Coinbase, among others, will focus on developing a stable universal currency that’s designed to accommodate low-cost transactions across borders.
“The goal of this new project is to build a financial ecosystem that can plug in and empower billions of people,” explained Dante Disparte, head of policy and communications for the Libra Association.
It’s early days yet, but 2020 may well be a watershed moment for driving the world of cryptocurrencies away from the soulless Wild West period of late-2017 and 2018 and into a new era of inclusivity and innovation. Hope springs eternal.
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