It's a new year and a new run up in cryptocurrrency prices. These moments always trigger media speculation and end the "is crypto dead?" questions that immediately crop up when prices go down. The end of 2022 saw the failure of several large non-Canadian businesses in the cryptocurrency space, fueling concerns like "is crypto dead?" and whether "crypto will ever recover". I've been seeing these waves of questions and concerns, and then the euphoria when prices go in the other direction, for nearly a decade. The truth is that cryptocurrency prices are volatile, and that cryptocurrency has never died. Even sustained downward prices aren't a sign of failure or "the end of crypto". Because cryptocurrencies were not invented to go up in price and they function just fine without large speculative bubbles.
Cryptocurrency is of course a great medium for speculation. It's digital, instantly transfers, and can now be purchased all over the world. It's a global market with high liquidity and it's not too challenging to start buying and selling. Private key management is technically complex, but even relatively unsophisticated people can do it. And there's always centralized players who are willing to provide that function (at the price of risk and cost for the end user). Whether it's called speculation, investing, or gambling - the concept is the same. Volatility can itself be an attractive property for people looking for that.
But the speculation use case doesn't supercede other applications of cryptocurrency, or the wider set of blockchain applications. There's payments, DAOs (digital organizing), NFTs (art collecting), token-gating (communities based on ownership of digital assets/rights), supply chain tracking/verification, insurance, and much more that's been either tried or commercialized in the last few years.
The payments use case of blockchain is one of the earliest, and the one that was the biggest focus of the original Bitcoin paper that accompanied the source code. This use case never went away. Cryptocurrencies can generally be used for this purpose, and they work quite well for it. As of a few years ago, it's even possible to send fiat-equivalent payments using stablecoins. There are even stablecoins that are specifically regulated, such as New York State's oversight regime through the NYDFS.
Recognizing Overlapping Use Cases
Overlapping use cases are tough for media who are looking for a simple story. But blockchains from nearly day 1 have been the subject of intense interest in making them do more than just payments, and today there are thousands of experiments out there. I've written about many of these stories over the years on this blog. It's tougher to understand a technology with many applications, but that's also the opportunity that's inherent in any flexible technology.
Email can be used for many purposes because it's a flexible technology. Similarly, cryptocurrencies and the wider sphere of blockchain technology, have many applications. Some are well-defined like payments, and others are emerging like NFT token-gated communities.
New Year, New Applications
It's now 2023. Fourteen years have passed since Bitcoin was invented. Ethereum will be closing in on its 10th anniversary in the near future. Since these blockchains started there's been hundreds of competitior chains and dozens of discrete business models and applications that people have developed around the world. I'm looking forward to seeing what innovators develop in 2023.