Digital currencies have to meet a need

Digital Currencies Have to Meet a Need

Last Updated: April 26, 2022By

Confused about cryptocurrency? You aren’t the only one! Last December, Bitcoin hit a record high of $19,783.21 and the total crypto market was worth around $890 billion. Last week, following a period of dramatic price swings over the summer, the market dipped below the $200 billion marks with Bitcoin trading at $6,500, before it rallied. Perhaps not surprisingly, experts are becoming increasingly divided as to the market’s future prospects, while Bitcoin investors remain uncertain whether to buy or sell.

Much of the uncertainty is due to sheer market volatility, caused by the unrealistic expectations of inexperienced investors as well as genuine doubts about how to assess digital currencies. Is it an online method of payment, a type of high-tech investment, or a blockchain token? Or is it something else entirely? Does it represent a revolutionary new concept which is only a short step away from institutional acceptance, or is it just a scam?

The Need for Regulation

Concerns about volatility, have led to calls for proper regulatory support for the industry, as well as SEC approval for an exchange-traded fund (ETF), in order to overcome legal and institutional obstacles to mainstream acceptance. Unfortunately, the SEC is in no mood to play ball. In August it rejected five separate sets of proposals for Bitcoin ETFs, leaving the market on edge and over-anxious. Indeed, for some weeks, market sentiment has paid more attention to SEC approval — a subject hardly mentioned during the 2017 bull run — than it has to numerous signs of institutional acceptance of the crypto-based technology.

For example, in late July Forbes reported that Northern Trust Corporation, a US financial services firm with more than $10.6 trillion in assets under custody and administration, had begun helping traditional mainstream hedge funds expand into digital currencies. Northern Trust is also a serious investor in blockchain technology for use in a variety of areas. In August, Intercontinental Exchange (ICE), multinational owner of global exchanges for financial and commodity markets, announced a new company, Bakkt, that aims to create a trading hub for digital currencies. The platform will allow consumers and institutions to buy, sell, store and spend digital assets on a seamless global network. In September, it was announced that the $175 billion New York-based Citibank will shortly be offering a financial instrument called Digital Asset Receipt (DAR), to allow institutional investors to invest in digital currencies in a fully insured and regulated manner. These are just three of a growing list of major financial institutions who are collaborating on exploratory projects involving crypto technology.

Also, read – The Most Important Characteristics of Blockchain Technology

Not Enough DApps

In the last week of July a report by UBS analysts — rejecting Bitcoin as a viable method of payment due to its instability – reiterated the Swiss giant’s commitment to continued research into digital currency and its underlying blockchain technology. This is a crucial point because in order to understand digital currency we need to understand more about blockchain — the encrypted technology that underpins it. The trouble is, at present, there are very few tried and tested blockchain DApps in circulation. The vast majority are still on the drawing board or being built. A few are being beta-tested. Only a tiny handful are in use. As a result, it is almost impossible to predict the future size and shape of the digital landscape.

Even so, given the gradual but ever-widening commercial interest in the blockchain, we can say one thing: just as the internet didn’t disappear because of the dotcom boom and bust, so digital currency won’t disappear because the market is too volatile or over-hyped. The truth is, digital currency is here to stay because it meets an important future need — the need to pay for transactions and services within the blockchain ecosystem.

So which digital coins will survive? Frankly, no one knows. But we can be sure that any coins that do survive will only endure because they meet a need. We picked two candidates. Bitcoin and Nuls.

Bitcoin

Bitcoin will almost certainly survive, except not as a currency but an asset. Since only 21 million Bitcoins exist, its essential value lies in its scarcity, not unlike a Penny Black, the world’s first adhesive postage stamp. A total of 68 million Penny Blacks were produced during the nineteenth century, of which roughly 1.3 million are estimated to have survived. In mint condition, one Penny Black is worth around $3,000 — approximately 500,000 times its original value — simply because of its rarity value and collectability.

Initially, for our second crypto pick, we were tempted to choose Monero, because it meets the need for secrecy since no transactions on the Monero blockchain can be matched with a particular user or real-world identity. However, we doubt that regulators will continue for very long to allow Monero to facilitate anonymous transactions that undermine anti-money laundering laws around the world.

The Nuls Blockchain Building Kit

In the end, we opted for Nuls, the Chinese blockchain company located in the high-tech area of Chongqing (population 30 million). We chose Nuls for two main reasons. First, it has the prestigious imprimatur of China’s Center for Information and Industry Development (CCID), the research institute under the Ministry of Industry and Information, who in August recently included Nuls on China’s coveted Global Public Blockchain Technology Assessment Index (GPBTAI). The company is ranked eighth on the index for innovation.

Second, it has outstanding technological capabilities that have already led to several joint projects in areas like medical data and mobile payment solutions. Nuls is developing an open-source, customizable blockchain ecosystem, consisting of multiple micro-kernels and functional modules. Called Chain Factory, its unique appeal lies in its modular, multi-chain parallel architecture that enables the creation of new chains using the company’s library of modules. The latter covers a range of functions including network, account, ledger, storage, consensus and smart contracts, as well as the cross-chain exchange of data and value. (Cross-chain tech is critical for the free circulation of assets and value from chain to chain without breaching confidentiality.)

In simple terms, Chain Factory is a lego-style blockchain building kit, that companies can use to fast-track their particular chain or application without the need for specialist blockchain programmers. What’s more, its modular, open-source structure allows anyone to contribute just by adding or editing their own modules for everyone to use.

The Nuls Vision

The Nuls vision — with the help of its giant family of community developers — is to use its modular, open-source structure to meet the need for an off-the-shelf blockchain solution and, in the process, to become the world’s biggest and most widely-used blockchain platform. Imagine a place where every module you might need is stored. Do you need a smart contract? No problem, simply install that particular module. Do you want a supply chain application? No problem, just configure what you need and run it, making the finished product adoptable by other enterprises with no knowledge of blockchain. It’s a cool vision and we look forward to hearing more about them.

Stay informed with daily updates from Blockchain Magazine on Google News. Click here to follow us and mark as favorite: [Blockchain Magazine on Google News].

Gif;base64,r0lgodlhaqabaaaaach5baekaaealaaaaaabaaeaaaictaeaow==

Get Blockchain Insights In Inbox

Stay ahead of the curve with expert analysis and market updates.

Disclaimer: Any post shared by a third-party agency are sponsored and Blockchain Magazine has no views on any such posts. The views and opinions expressed in this post are those of the clients and do not necessarily reflect the official policy or position of Blockchain Magazine. The information provided in this post is for informational purposes only and should not be considered as financial, investment, or professional advice. Blockchain Magazine does not endorse or promote any specific products, services, or companies mentioned in this posts. Readers are encouraged to conduct their own research and consult with a qualified professional before making any financial decisions.

About the Author: Editor's Desk

Avatar