By Matthew McCarty
Blockchain technology has real potential and current day utility. But to what ability will it shape our future? It may come as a surprise to learn that blockchain technology is being developed for uses beyond just digital currency.
Recently, the space has evolved to handle smart contracts and the recent use of Non-fungible Tokens (NFTs) to show proof of ownership. For most Americans though, blockchain = cryptocurrency = digital currency.
Elon Musk, possibly the only person to make Saturday Night Live more unwatchable than it already is, announced that Tesla would accept Bitcoin as payment for its vehicles, elevating digital currency’s public perception.
Weeks later, however, Musk reversed the decision over concerns of the use of fossil fuels for Bitcoin mining.
Immediate reactions from people that should know better assumed this was Dogecoin’s chance to take the crypto throne. However, Dogecoin also uses the Proof of Work transaction system that causes so much energy use. Investors responded with the entire market dumping. Notably, Bitcoin fell below $50,000 late evening.
Also, if you’re considering investing in Dogecoin because it might reach $50-60,000, please research the token supply. There are over 129B tokens in circulating supply, and every minute 10,000 more coins are issued in perpetuity. Bitcoin has a finite supply of 21M tokens. If one Dogecoin was worth $60,000, the coin’s market cap would equal approximately $7.74 quadrillion.
Now, it’s highly improbable that Tesla was unaware of Bitcoin’s energy use when they held it on their balance sheet and accepted it for transactions. This criticism of Bitcoin has been around for quite some time.
Furthermore, it’s unlikely the self-proclaimed “Technoking of Tesla” was unaware of cryptocurrencies like Nano (NANO), Ripple (XRP), and Stellar (XLM). None of those use Proof of Work, so they use far less energy in completing transactions.
The first coin, Nano, is a feeless cryptocurrency. Estimates say it could complete 6 million transactions with the energy it takes to complete one Bitcoin transaction. Nano boasts some real world uses too, with a handful of third party managed services to choose from. This includes the app WeNano. The app features hot spots where users can collect small portions of Nano currency to test out its fast, feeless system.
However, being feeless has potential downsides. Spam attacks left many questioning Nano’s ability to serve as a currency in the future. Since then, developers believe they’ve corrected this issue with “feeless spam-resistance”.
Secondly, there’s Ripple. While not feeless, Ripple has a standard transaction fee of 0.00001 XRP (the cost of XRP is about $1.32 at the time of writing). Ripple also has a carbon calculator highlighting its energy efficiency in comparison to crypto kings Bitcoin and Ethereum. Also, Ripple is focused on corporate partnerships. With those partnerships, they’re setting up payments systems on RippleNet, Ripple’s enterprise-facing network.
However, the SEC is currently suing Ripple under the presumption they ran an unregistered digital asset security offering. Ripple’s marketing team has spun any case development into positive news though. Despite the trial, their coin appreciated approximately 500% on the year. The company’s even mulling going public after the trial’s conclusion.
There’s also criticism that governments and central banks will never allow cryptocurrencies to truly flourish. However, a handful of projects suggest otherwise.
Stellar, for example, has low fees (0.0001 lumens), low energy usage, and real world collaboration with world governments. IBM helped facilitate this collaboration as a sort of conduit for Stellar to have access.
I spoke with Sam Connor, Stellar Global founder and Stellar Global Radio host, for insight on Stellar’s involvement with world governments.
He emphasized creating a platform that works within the regulatory and governmental construct as a focus in Stellar’s development. He pointed to recent hires like US Attorney Office’s Candace Kelly as General Counsel and partnerships with Finclusive and Elliptic.
Stellar’s other ventures in relation to governments include:
- The crypto-based Ugandan city that rapper and philanthropist Akon created chose Stellar to build the city’s currency, Akoin (AKN).
- Ukraine’s Government chose Stellar to build a central bank digital currency.
- A partnership with Bidali, which currently works with Bermuda’s Government.
- Stellar leadership helped brief the House Financial Services Committee on blockchain technology and its role in transforming financial services.
- Investment in Cowrie Integrated Systems, a fintech startup working with the Nigerian Government to develop payment corridors in and out of the country.
Overall, fees make the above cryptocurrencies valuable to the end user. People can send Nano, Ripple, and Stellar across borders for less than a penny. Comparatively, wire fees typically cost no less than $15. As for Bitcoin, the average transaction fee is roughly the same.
Cryptos and the Government
This differs in China though. In April, Chinese officials declared cryptocurrencies as investments, not as a medium for payments. This declaration’s timing coincided with the government’s own digital currency, the Digital Yuan. Although, early users remain unimpressed.
Following China’s declaration, many are watching how Chinese altcoins fare in comparison to competitors abroad. These coins include NEO (NEO), VeChain (VET), and Trias Token (TRIAS). Initial reaction to this proclamation sent several Chinese altcoins soaring.
Another project with government support is KardiaChain (KAI). KardiaChain is a blockchain focused on interoperability. This allows for the exchange of data and assets across multiple blockchains. This isn’t entirely novel, as several others inhabit this space.
However, KardiaChain enlisted government related advisors. This move helped them gain support from the Vietnamese government, riding the wave of the ‘Made In Vietnam 4.0 Program’. What makes this particularly interesting is Vietnam’s cryptocurrency use is second only to Nigeria.
Now when it comes to the US, many believe that banks and financial institutions will push back. A newer blockchain in development, Revolution Populi (RVP), aims to bridge that gap as a decentralized clearinghouse.
Forbes reported that JP Morgan is planning for such a development. Connecting the dots, JP Morgan Managing Director Gary Chan is a Clearing House Advisor for Revolution Populi.
Another way to circumvent the “banks will prevent it” theory is to “become the bank”.
Telcoin (TEL) may have figured this angle out. Telcoin’s Co-Founder, Paul Neuner, testified for LB649, an act in Nebraska state legislature that would allow creation of digital asset depository institutions in Nebraska. Some believe Telcoin will be the major benefactor if this bill becomes law.
Still, it’s easy for Americans to become hyper-focused on how something will affect them directly. But that is not always how development occurs. It’s quite possible that Crypto will shine in developing nations well before mass adoption occurs in North America.
Reserve Protocol (RSR) could supply a stable currency for countries experiencing debilitating hyperinflation. The average person uses Reserve through the protocol’s mobile app. Places like Venezuela, Argentina and Columbia already use Reserve for payments and transactions.
It uses the Reserve Token (RSV), a stable currency used for payments the same way we use cash. RSV uses collateralized assets held to keep the price at $1.
The Reserve Rights Token (RSR) stabilizes RSV if inflation creeps in. Traders profit when these values differ, which helps stabilize the price and provides added collateral when needed.
Reserve Protocol also boasts many high profile investors. Casual investors may see this lineup and decide they must “follow the money”, but beware. High profile involvement doesn’t guarantee success.
Clover Health (CLOV) is a good example. Many invested due to Chelsea Clinton being a board member. Subsequently, they watched the stock fall over 50% since their 52 week high of $17.45.
With all that said, where does one turn to learn enough to invest properly?
Crypto Twitter is both a sewer of scams and a wealth of information. Discord and Telegram channels hold the place that Wall Street happy hours did for hedge fund analysts.
But above all else, hold the acronym DYOR close to your chest. Do Your Own Research. It is the only kind that can be trusted.