Bitcoin has the brand recognition, and it may always function as a reserve currency for cryptocurrencies. But for day to day use throughout the world it will be superceded by other blockchain products.
In some cases it may be pushed aside by products that are merely blockchain-like. Raoul Pal says that in India, BHIM has signed up nearly a billion people, giving them instant electronic access to a virtually free electronic payment and money transfer system. It is not on a blockchain, but really, who will notice the difference? It’s just another e-currency; it’s almost free; and it works. And can Bitcoin fight off the evil VISA? VISA has initiated its own blockchain for business to business transactions (American Consequences, July 2017). How long before it does the same for consumer payments? Everybody uses VISA. Bitcoin can’t compete (American Consequences, July 2017). As popular as it is, it is not VISA. Nowhere close.
There are more arenas where Bitcoin is being pushed aside. Raoul Pal says that the futures exchanges, derivative settlement systems, and custody systems have developed their own private blockchains. The “currencies” on such private blockchains do not need tokens or tokenization; they are not intended for use outside the private networks where they function. This phenomenon will grow, particularly in the financial, insurance, legal, and accounting industries (American Consequences, July 2017).
So investing in Bitcoin and the other cryptocurrencies that has “brand names” such as Etherium, Ripple, and some 750 less known cryptocurencies may just be a bubble in spite of the fact that the blockchain technology that they are based on is here to stay. Pal comments that more money will be made on software programs written to handle blockchain transactions than will be made on cryptocurrencies themselves.
Yes the blockchain is now a proven technology, and it is definitely here to stay. As Teeka Tiwari says, because the blockchain is radically more efficient than current methods, most international trade and most real estate transactions will be done on blockchains within a few years time. When we add to that what we saw above, that investments will be traded on the blockchain, there is not much left that won’t be on the blockchain.
But international trade, real estate, and investment blockchains will be largely proprietary and won’t be tokenized in a way that you and I could buy and hold them as tokens that store value. Goods will be shipped between continents, and the transaction will be tracked and recorded using a blockchain operated by banks used for international trade. Homes will be bought, held, and sold like we do today, but under the hood the contracts and deeds would be executed on a blockchain operated by the real estate industry. Stocks, bonds, options, and so forth will be traded and represented on a blockchain. In none of these cases are we buying and holding and then spending a cryptocurrency in the sense of holding or trading Bitcoin as a currency. In many cases these products will be something called “smart contracts”.
Does that leave day to day currency as the final resting place of the cryptocurrencies? If Doug Casey is right that the U.S. dollar is slated for replacement by a blockchain-based “Fedcoin”, then even cryptocurrency-as-a-currency will be co-opted by governments and corporations. Buying the cryptocurrencies that exist on the market today in the hope of their appreciating as “currencies” would be a lost cause. They would be crushed by the big government boot.
Casey gives these reasons why we may actually see the Fedcoin: A Fedcoin would provide the Federal Reserve (or some similar entity) with a single instantaneous dataset comprising all transactions in the economy. The ability of the government to tweak monetary and fiscal policy would be greatly enhanced. Imagine the tax code embedded directly into your money. The government would be able to tax transactions of all types at what it deems are appropriate rates to encourage or discourage behavior patterns. In fact it could shut down certain transaction types entirely and could do this for specific residents with flagged character profiles. Do they think you are a terrorist? No fertilizer for you. Do they think you are gaining too much weight? You get the picture. The potential for totalitarian control is draconian.
This returns us to Bitcoin. It is the premier cryptocurrency that sustains the one value that none of the applications described above protect: privacy, and thus individual freedom. Buying, holding, and selling Bitcoin is anonymous. Not all cryptocurrencies are.
Perhaps we can say that the blockchain is not the primary identifying mark of a cryptocurrency. Perhaps anonymity is. Bitcoin has the largest market cap of all the cryptocurrencies and has been made legal in numerous countries. It is the natural enemy of something like Fedcoin, but it is so large now, and having legal precedents, it is going to be difficult to suppress. Bitcoin could be the icebreaker that forges a pathway of legality for the other anonymous cryptocurrencies.
Who is going to win? Bitcoin, or its evil big government / corporatist nephews? I don’t know (well I have a good idea – something about the mark of the beast and no man may buy or sell lest he have it). But leaving the antichrist out of it, if we can do that, if you are thinking of dabbling in the cryptocurrency market, you might consider two types of currencies. First there are those like Etherium and Ripple, which lend themselves to the corporate need for “smart contracts”. Second, there are cryptocurrencies that do not require entry into the Know Your Customer (KYC) program and are thus traded anonymously. These are the true-blue cryptocurrencies, and if Bitcoin survives in anything like its original form, they might too as a hedge against either systemic risk or totalitarian control.
P.S. If you don’t want to leave the antichrist out of this, please consider: