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The Evolution of Blockchain and Cryptocurrency Usage: Normalizing and Innovating

  • Darryn Pollock
    ⭐ Features

    Cryptocurrencies are inherently a currency, but there is far more uses being created every day for this disruptive tech

The Evolution of Blockchain and Cryptocurrency Usage: Normalizing and Innovating
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There is no doubt that the first cryptocurrencies were created to be a digital cash, but from those humble beginnings there has sprouted a massive ecosystem that continues to innovate as well as normalize.

Cryptocurrencies and Blockchain technology have an incredibly broad spectrum of application that is still being discovered and explored today. The usage of the Blockchain is expanding into traditional sectors, and the technology is being eagerly looked into by banks, governments and corporations.

Cryptocurrencies too are becoming more normalized and useful. They are no longer just a tool of the dark web and in fact are becoming more and more like traditional assets with the creation of Futures contracts, potentially ETFs, and even as collateral for loans.

Blockchain’s advances

The key technology for cryptocurrencies is at a stage where many different sectors believe they can innovate and advance their areas of ecpe rise by implementing Blockchain technology. From supply chain to cloud computing, the scope of this technology is almost endless.

Many different Blockchain companies have seen the possibility of Blockchain in creating a decentralized cloud storage network. This is the premise of Golem, but there are others that are trying to innovate this space and sirupt the well known and centralized models.

Pavel Bains, CEO of Bluzelle explains:

“The easiest thing to forget is there’s a massive amount of data being consumed by all applications and products. With all this data being exchanged, the current Internet just doesn’t have the infrastructure to protect its security, scalability and reliability.”

It is clear that for this type of technology, necessity is pushing innovation. Security of data and the current internet infrastructure is in need of an upgrade, and this is where the Blockchain can step in.

In a similar vein, but slightly differently, cryptocurrencies are also infiltrating financial sectors, but their mandate seems to be more about becoming normalised than total disruption.

From spending on the Dark web to securing a loan

Cryptocurrencies began their life as a coin on the Internet, and especially a coin if the Dark web. They are inherently a spending token that derives value from a small, but growing market.

However, their evolution and expansion into the mainstream is continually evolving, and it is this evolution that is being spurred on by normalizing the digital asset, as well as finding more functions for them.

Can Gulec, of cryptocurrency lending platform Kambo, explains how by offering traditional lending services, but based on crypto assets, can aid in normalizing the digital currency economy.

“We want to facilitate adoption. We believe traditional financial systems and disruptive fintech systems should be integrated and seamlessly connected. There needs to be a bond between alternative assets classes - like cryptocurrencies - and traditional financial institutions - banks and lending institutions. Through this, not only we are enabling people to unlock the value of their holdings, but also allowing more complex products to be built.”

Challenges to cryptocurrency evolution

A lot of the problem with trying to fuel the adoption of cryptocurrency, and to get people to understand it as an alternative currency, has to do with understanding its value. Bitcoin has been labelled many times as inherently valueless, but that notion alone is a tricky one.

“Value is a very tricky notion to define and has been a critical attack point for crypto-sceptics,” Gulec goes on to explain. “People have used anything from massive rocks to cowry shells as a store of value.”

“Everything - gold, precious rocks, fiat currency - is valueless if you take human consensus out of the equation. As more complex tools are built around an ecosystem, its foundation becomes stronger and its chance of standing against the test of time increases. So, in our case, the ability to take loans against crypto assets makes them a much more interesting asset class, because then one can unlock their value by leveraging against them and using them like any other liquid financial asset.”

Cryptocurrency adoption has slowed recently, especially as the hype and buzz around its growing price has cooled. There now needs to be a second wave of adoption, and that will only really come when people can see cryptocurrencies in the same light as any other asset or mode of exchange.

The more people are normalized to cryptocurrencies, the easier they will be to pick up and use. The evolution on this space is very dependant on innovation in one instance, but that innovation needs to be bridged with the traditional to bring people across.

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Question of the Day: Can Stablecoins Accelerate Cryptocurrency Adoption?

  • Yuri Molchan
    ⭐ Features

    Stablecoins show hardly any volatility compared to Bitcoin and altcoins, many are hoping that they will be able to bridge new crypto economy and regular fiat money

Question of the Day: Can Stablecoins Accelerate Cryptocurrency Adoption?
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Contents

Bitcoin, the father cryptocurrency, emerged in hope that it will remove all intermediaries in electronic commerce that cut off their share of payments. BTC was perceived as a P2P way to replace fiat cash in an electronic format, which would enable one party to pay another without any financial institution or payment platform which would demand its share of a transaction as a reward for its services.

What is wrong with Bitcoin

For quite a while Bitcoin was performing the way the crypto community expected. But the situation changed later – BTC rate became weaker, thus bringing down its financial and economic reliability, when it gets to be used as a regular means of payment.

You cannot have a currency that would cost like a British castle today, a gram of gold – tomorrow and a pack of French fries the day after.

At that point practical fintech minds came up with an idea of creating something which would become a breakthrough in the universe of crypto – a so-called stablecoin.

Will stablecoins solve the volatility problem?

Technically, stablecoins are protected from the volatility roller-coaster that Bitcoin and other cryptos love to ride. They are programmed to keep their prices stable and investors now are largely attracted to this new type of digital assets.

Stablecoin does not show any volatility in its monetary value, since it has a fixed connection to an asset it is pegged to. The major goal of using stablecoins is taking the best from decentralized crypto coins and combining it with a constant value. Thanks to it, stablecoins can be used as a reliable means of trade.

Asset-pegged stablecoins

Asset-backed ones get their value from an asset as can be understood from the name. An asset provides the necessary value to a coin, as well as the necessary legitimacy.

A great example of an asset-pegged stablecoin is Tether (USDT). In spite of a series of scandals at the end of last year, it remains the most popular stablecoin in the crypto market.

Recently, it has partnered with the Tron Foundation to launch a Tron-based stablecoin.

Other examples are TrueUSD (TUSD), USD Coin (USDC), the Gemini Dollar (GUSD), and the Paxos Standard (PAX). They are all pegged to the USD.

Crypto-backed stablecoins

Some digital coins work in a similar way to fiat-backed ones, however, they are pegged to collateral crypto. That means that crypto assets that ensure the value of such stablecoins are stored in a wallet similar to escrow.

A good example of a crypto-pegged token is Maker, which is ranked 16 on CMC.

Algorithmic stablecoins

Even though, stablecoin can be interesting at first thought but the way they are built goes against the principle of decentralization that crypto coins have as a foundation. Thus, many crypto fans and evangelists are positive that stablecoins must be linked towards not a centralized asset but a computer algorithm which takes value from a balance between supply and demand.

Basis is now considered the most promising algorithmic stablecoin of all.

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Can stablecoin ensure smooth future for the crypto industry?

The primary goal of all crypto assets was and remains to come up with virtual asset that would be liquid enough and not vulnerable to market volatility. From this point of view, stablecoins are a dream of all crypto fans and evangelists of a decentralized economy.

Apart from the potential to conduct crypto transactions smoothly, experts believe it can bridge the two worlds – fiat and crypto, bringing them a mutually beneficial coexistence. However, that may take time.

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