Yesterday, I was out with some friends and we got to talk about the current financial situation. It was a very interesting conversation and when we reached the topic of crypto, I realized that we had different views on it. While some of us saw it as great opportunity to make money, others saw it as the holy grail of the future. This is what inspired me to ask the true purpose of crypto and I would really like to know your opinion on this since the majority here are involved in the crypto space.
Types Of Crypto
Let’s start off with some basics or at least how I see the crypto world from my eyes at the moment. There are several different coins and tokens out there. Some of them are supposed to be a store of value, such as BTC and were promised to revolutionize the world of finance. By now, we all know that the Blockchain is kind of slow and would not be the perfect use case for actual transactions (with exception of the Lightning Network).
Then we have blockchain coins like Ethereum or Cardano, that are basically enabling all sorts of decentralized applications to exists in their ecosystem. All of these second layer applications enable people to do different kind of things and these blockchain coins are the base layer for all of these applications. I kind of see them as energy because without them, those decentralized applications would not exist.
Furthermore, there are tons of meme coins or sh*t coins like people would call the nowadays. I am talking about coins like Shiba Inu or Doge that do not have real purpose. In general I am trying to stay away from them, but I can also see how people are gravitating towards them in this mad world we are living in.
Let’s also not forget stable coins who are currently very heavily under investigations by governments who are supposed to be just the bridge from fiat to the crypto world. There are also many more different types but this should now not be the main purpose of this article. My main question right now is: Are all of those coins needed?
True Purpose
See, in my eyes, not everyone of these coins are needed and I think the majority here would agree with me. The problem here is that a diverse market needs diversity to grow and to thrive. And there must be failures such as Terra-Luna or Safemoon to sort out things that do not work and sort out malicious players. I think that in the long run it is only benefiting the crypto community, although it could hurt in the short term.
What I want to discuss now is, what the real purpose of crypto actually is? I don’t know if it is just the October weather that brought these “philosophical” thoughts into my head, but I kind of want to pass the question down to the community here.
Many big investors, see crypto as software that enables different things. I think that this could be an easy way out to explain my question but I am not satisfied with this answer. In the end, I do think that there is a difference between Microsoft and crypto while both are considered Software.
Others would say that crypto, especially Bitcoin, was brought to life to revolutionize the payment sector of the world. After all, BTC came to live after the 2008 financial crisis. I would accept this answer but by now we have so many different use cases to crypto that I am a little bit overwhelmed. Also, I think we all could agree that the current financial system is everything but perfect but we also have to admit that so far, no digital version was flawless as well. While right now the idea of elastic fiat money is not very popular, there are as well many drawbacks of hard and rigid money such as gold or Bitcoin.
Another very interesting view, that a lot of Bitcoin maximalists are sharing is that crypto will give the freedom of choice back to people. I can see their view on how everything is getting more and more controlled and that people just do not want to be cut of by some extreme rulings that would affect them in the future. While in the past view years we did not have a real extreme case, I see the fear of people that with current development in the world, extreme rules could influence a lot of people in the future. On the other hand, I feel like, that if you fear something would happen you are making it inevitable, but this is just my opinion.
Wealth Transfer
Last but not least, there are a lot of people that are seeing this space as a great investment opportunity for the future. The main argument here is that there is the next generational wealth transfer coming and crypto will play a big part in it. I must also admit that I am one of these people. But is this the true purpose of crypto? I don’t think so! The problem now is, that a big portion of people are investing into crypto without even understanding it and this is what makes it so dangerous in my opinion.
Another view on this is that this generational wealth transfer can only happen if more money is flowing into the crypto scene. This money right now is with the boomers and very conservative investors. So what are they waiting for? Why are they not investing into crypto? Well, the easy answer to this question is: regulations! Because the crypto space is not very regulated at the moment, many big investors are fearing to not be complaint and therefore lose a big chunk of their money. I think this is understandable. The problem with all of the crypto maximalists is now the following:
They want crypto to gain in price. This will most likely only happen if regulations are put in place and a lot of money from the big investors come in. But this would mean that the purity of crypto gets lost and the main idea of freedom and financial independence get lost wouldn’t it? And this is exactly what I can not really wrap my head around. What is the true purpose of crypto then?
Conclusion
I am aware that I am scratching just the surface here, but I think that this could be an interesting discussion point and I am also very sure that we could get different opinions on this topic here. This is why I would encourage everyone who thinks to have figured it out to enlighten me! I am very grateful for every opinion that I could get 😊
Published by ga38jem on
LeoFinance
On 15th October 2022