Marketcap: $250T: Understanding The Potential Of Blockchain And Where The Power Comes From
There was some debate in the comment section of one of my articles yesterday that I thought I would answer in a post.
I want to thank @scandinavianlife for the comment that started the discussion.
Here is what was written.
BLOCKCHAIN is going to change society. Cryptocurrency on the other hand is less likely. People don't care so much about decentralization. Its a niche thing.
Any large company or bank or government can implement blockchain technology without the decentralization aspect, which basically makes it worthless for the rest of us. Only good for them. Am I completely wrong here? Not saying that crypto wont have a place...but this whole 50 trillion mcap and Steem to 100 and btc to 100k..hmm..I doubt that will happen.
In my view, yes a lot is being missed.
To start, I have no idea if BTC will hit $100K, $1M, or if John McAfee will eat himself on live television. The price of an individual token is hard to determine. There are some blockchains that will do well and others not so well. In spite of that, markets are their own entity and there is no guarantee a highly successful blockchain will receive favor from the market.
That said, I believe BTC is a unique entity in that it has the name recognition, liquidity, and the allure of "digital gold". It is not the best blockchain technically and might pay a price down the road for that. Nevertheless, it has the attention of Wall Street which could work our well for it.
People don't care so much about decentralization. Its a niche thing.
At one time the telephone, Internet, automobile, computer, and smartphone were all niche things. It is not widespread now yet there is no way of determining what things will be like in a decade. The one thing we do know is that centralized entities like Facebook are being hammered publicly. Part of the FUD spread about cryptocurrency is all the tokens stolen via hack. Isn't it ironic that is occurring because of centralized exchanges.
And we won't even enter the debate about data and surveillance which is starting to gain a lot of momentum.
Any large company or bank or government can implement blockchain technology without the decentralization aspect, which basically makes it worthless for the rest of us.
In my opinion, this is confusing blockchain with propaganda.
Blockchain is revolutionary. Blockchain is powerful. Blockchain is going to change society.
There is a problem right now. The major corporations are misleading people. There is blockchain and then there is propaganda.
When the banks say, for example, they are using blockchain for their settlements. they are not being truthful. If they were using blockchain, they would be doing something that is relatively new. What they are doing is decades old.
Distributed ledgers is nothing new. They have been around as long as the network. Shared databases go back to the old IBM days in the 70s, long before Oracle.
What institutions such as this are doing is using shared database technology to set up a distributed ledger that is under their control. That is not new; it is not revolutionary; nor it is powerful. It is highly useful but something they could have done years ago if they chose to.
The power of a blockchain comes in being decentralized. A "blockchain" that is not decentralized can be hacked. It can be shut down since there is a company or companies that own it. There is no guarantee that the transactions are as they claim since the system can be changed. Of course, since it is a closed system, who knows if the transactions were even done to begin with? Finally, a blockchain eliminates counterparty risk, something that is not the case with a centralized "blockchain".
An open, decentralized blockchain enables innovation. This is not present in what the corporations are proposing. Anything that is centralized is going to have procedures and guidelines as to what can go on that "blockchain". It will also be done only by people working for or contracted by that company.
That is not true with a blockchain. Anyone can hang whatever they want on the STEEM blockchain. The community then decides if it uses it or not. Anyone, anywhere in the world, with an idea can create an application. This is one of the most powerful aspects of blockchain.
We saw how innovation lagged the last 20 years as the Internet becomes a centralized network run by a few companies.
Not saying that crypto wont have a place...but this whole 50 trillion mcap and Steem to 100 and btc to 100k..hmm..I doubt that will happen.
This is a common mistake also. The market cap of cryptocurrency will not be $50T, it will be $250 trillion. Few have taken the time to understand what the token economy really means. It is taking what is not liquid and making it liquid.
There are hundreds of trillions of dollars in real estate, art, intellectual property, and partnership agreements that have little to no liquidity. There is a penalty to that when one goes to sell. It is also very difficult to get money out when needed. Any transaction contains a higher cost to make.
Just look at the difference in selling a house (6% commission plus fees) versus shares of stock (often under 2%). The reason for this is liquidity.
Because of this, all many assets in those categories will be tokenized.
If this sounds outlandish to anyone reading this, the first transaction of this nature is taking place on ethereum. A gallery is selling 49% of Andy Warhol painting.
https://www.ccn.com/crypto-auction-5-6-million-andy-warhol-art-to-be-sold-via-ethereum-blockchain/
https://cryptobble.com/2018/06/08/tokenized-andy-warhol-art-to-be-sold-on-ethereums-blockchain/
These are being termed Security Tokens.
Another byproduct of this is that people are going to be able to trade cross asset. One could take a piece of the partnership he or she has in an office building and trade that for a portion of a piece of art. It is simply a matter of selling the partnership token and buying the art token (or even doing an atomic swap).
Now, the only way to do something like that is with debt. Cryptocurrency eliminates the need for debt.
There is also another token that isn't really named but it is essentially an income or revenue token. Under this scenario, an individual or entity could issue a token against a future revenue stream. This would mitigate the risk to the entity that is going to earn the revenue while providing liquidity in form that could be traded.
For example, let us say a star college basketball player is expected to earn $150M in his career. He could issue $75M or $100M in tokens against that income stream. This give him less of a payout while reducing the risk he bombs or gets hurt. The token buyers would obviously be looking for him to max his earnings so the token has more value. This would be freely traded subject to the ups and downs of markets.
Or we could see a record company do this. Suppose they had a singer going on tour that is expected to generate $100M in profits. They could issue a token for that tour. The same would apply as I just mentioned. The company has $50M while the token hodlers are looking to have a successful tour. Tickets are purchased using the tokens.
Through the use of smart contracts on the blockchain, all monies related to those tokens are recorded on the public ledger. Hence, the gate from each stop of the concert tour is recorded along with associated expenses. The blockchain will be coded with the instructions of when to release the money and to whom.
Looking at cryptocurrency as a currency or, even, a utility token is missing a major part of the picture. Cryptocurrency is a paradigm shift. It is an entirely new model of funding. The examples I just gave are simply off the top of my head. I will not be surprised if there are 10 categories of token in 5 or 10 years.
There are going to be innovations we are not even thinking about right now. In 1992, does anyone believe most of those people were thinking about being able to post videos and pictures while upvoting content? Were most individuals pondering the idea of global communications for free in an instant? I am sure the newspapers, magazines, and long distance phone companies were not on that thinking about it then.
Many thought email and instant messaging were going to be niche applications too. Cryptocurrency will be as big as either of them.
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Well @taskmaster4450 we are indeed in the very early stages of the blockchain mass adoption! And I now that you are right and that sentiment still rules the crypto market.
But sometimes, like after those red days, it is hard to keep the faith! But still I will not sell with a loss, it can only go up from here!
More and more people will use blockchain applications. More and more people will get to understand how this will change their lives for the better!
And yes not all coins will survive, which isn't a bad thing!
We only have to hope that the good ones remain and not the ones who will be backed up by the best marketing machines or the ones that are backed up by the old world!
Remember VHS vs Betamax, where the superior product lost!
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Even if our market cap increases, chances are our coins won't be. BTC and ETH is being sold for shitcoins and ICOs, which is then getting sold by the ICO team as we hold their shitcoins. Their shitcoins add "value" to the total market cap, while driving big coin prices down.
There are too many people looking for a x100, which is why our big coins are suffering, since the money from BTC is getting diluted into too many alts. I personally predicted that BTC would fall from number 1 this year, and I still believe it will. No idea which coin will replace it though, but I'm sure as soon as there's another bull run, BTC dominance will fall as people discover more promising projects to invest in, and shitcoins ICOs to x10 from haha
You clearly have no idea what you are talking about. Do you have any time perspective? Bitcoin was at 2000 dollars a year ago.
Yeah, people bought BTC and ETH to participate in ICOs, thus making it rise.
Now, those ICOs have ended and teams are selling off their BTC and ETH (think EOS for example?) which is causing the prices to come crashing down.
Furthermore, more and more of our total market is going into smaller market cap coins, as the number of currencies keep going up. I hope you can understand this hahaha
The price is higher than a year ago. Which means you are delusional there hasn't been any crash. You just have a flawed time perspective. You have to look in 5 year times. Not lambo timeframes.
Fair enough, it's true I've only been investing for less than a year haha
However, if you think about it logically, I still think BTC will continue losing market dominance and alts will continue to rise. Also, if 65% down isn't a crash, I really don't wanna see a "crash"
65% down is regular in Crypto. Even 100% down is regular in a market like this haha. I don't have emotional attachment to numbers the core thing is they are still scarce assets in supply. Fiat will never be scarce it will always devalue
I just hope mcafee will fulfill his promise :D
Decentralization is what we all believe in the first place, and the reality is that you don´t need much knowledge inside crypto to understand the advantages of a world based on decentralization.
I feel like even giving crypto a market cap is flawed. It's a constant reminder that the blockchain is fledgling and requires the support of the old inferior system.
When you can get paid in crypto and buy anything you want with crypto you're not going to be all that concerned about how your coins are doing in relation to the dollar.
I think, in the end, crypto will have an infinite market cap. Once crypto makes fiat currency impendingly obsolete all the world governments are simply going to print their currencies into the ground as a last ditch effort to buy more crypto with it. I give it 20 or 30 years.
Well done @taskmaster4450. I do find this article quite interesting. My experience on the steemit blockchain gives me confidence that the future is bright. Decentralized application is the way forward. Blockchain solutions and projects are being created using decentralized apps. Projects like @mannacurrency, @bitnation are creating solutions that seem impossible in the past. Blockchain has huge potential in the future and I believe it will have a positive impact on cryptocurrency.
Alright @taskmaster4450! I like the cut of your jib. I had not even considered a work of art or a performers tour being tokenized on the blockchain. That's a pretty kick ass concept.
It does open the imagination to how blockchain can and will revolutionize how EVERYTHING will be done in the near future. I think I'll buy a few more EOS. Oh yeah, and some STEEM.
Thank you for the information. I dig what you're saying.
~X