Bitcoin, crypto, NFTs. Where is the journey going or have we already arrived at the end? For a better understanding, let’s look at three major fields in detail: Bitcoin, cryptocurrencies, and NFTs which NFT marketing has played a major role.
1) Bitcoin: cryptocurrency or store of value?
13 years ago, Bitcoin was born and promoted by its inventor as an electronic “cash system” – whatever that meant, because the word “cash” had different meanings over the centuries. For some, the focus is on the fact that “cash” is the generally accepted means of payment, for others that transactions with “cash” are final or final and that the cash recipient is no longer exposed to any counterparty risk after the transaction (in contrast to most other electronic means of payment, such as credit cards).
It would not be the first time in the history of mankind that an invention is ultimately used by people not in the sense of the inventor, but for what they consider to be a more important purpose. So it is not surprising that bitcoin is considered more of a possible store of value in the Western world, where there is a wide variety of electronic payment systems. However, there are also countries in the world where Bitcoin is currently the only electronic payment option available to many people and this aspect has more weight than the value storage function.
Bitcoin thus has many faces: cryptocurrency, crypto money, or crypto asset. It depends on your own point of view! How many people even know the difference between currency and money? The spectrum of existing opinions is therefore correspondingly broad. Some say Bitcoin is the biggest slingshot in the world, others believe it is the most significant invention since Gutenberg’s printing press.
Whichever camp you belong to, it is clear: Bitcoin will no longer disappear, at least not globally. More and more people are dealing with Bitcoin and finally, making the decision to get into Bitcoin. More and more companies are investing in Bitcoin, even the first countries own Bitcoin and are gradually saying goodbye to their old currency monopoly.
If you compare the market capitalization of Bitcoin with companies, Bitcoin is currently in 8th place with about 673 billion USD, after the well-known tech giants such as.B. Apple, Microsoft, Google, etc. Bitcoin resembles a big-tech company in many aspects, but without a CEO and no fixed, hierarchical corporate management. Compared to gold, the largest of all “assets” (about 12 trillion USD market capitalization), Bitcoin still plays in a smaller league but is still an integral part of the financial scene and many investment portfolios. Bitcoin is referred to by many as digital gold and is considered an important store of value for the future. This can be seen, among other things, in the fact that two weeks ago even one of the world’s “Big Four” auditing and tax consulting firms, namely KPMG Canada, converted part of its Canadian dollar reserves into Bitcoin.
2) Cryptocurrencies: Explosion of biodiversity
Few people can explain the difference between “currency” and “money.” There are now more than 15,000 cryptocurrencies (coinmarketcap). Many of them copy some or even all elements of Bitcoin, but hardly any of these currencies even begin to try to be a better “money”, but only an alternative “currency”, hence the classification as a cryptocurrency.
This diversity also makes trading and speculating with cryptocurrencies significantly riskier and more confusing than speculation with crypto money. When speculating with crypto money, the crucial question is whether Bitcoin manages to replace the basic money supply M0 (also called the “monetary base”), which is currently largely managed and controlled by a very small group of central banks, or whether Bitcoin just does not manage this and the 21st century, as well as the previous one, is characterized by a so-called fiat regime.
When speculating with cryptocurrencies, the bet or the question is which of the currently more than 15,000 candidates has the greatest potential as a technology for demand deposits, quasi-money, credit money, etc. The teams and technologies behind these cryptocurrencies are still young and their outcome is uncertain. Although some people have become millionaires by trading cryptocurrencies, at least as many have gambled and lost their investment.
Cryptocurrencies are naturally much more uncertain and also more volatile than crypto money, especially since Bitcoin is also fighting for the throne in cryptocurrencies through further developments such as .B. with lightning technology.
ALSO READ: How to Buy Bitcoin With Credit Cards
3) NFTs: A digital ecosystem in its infancy, for brand lovers and collectors
NFTs (non-fungible tokens) is the counterpart of cryptocurrencies (fungible tokens). In economics, one distinguishes all things that have “value”, either into fungible things or non-fungible things.
Currencies should be as “fungible” as possible because this is the only way to enable an efficient exchange process and an efficient profitability calculation. Non-fungible things, on the other hand, allow people to express their individual values and make them visible to other people. Typically, these are things with historical or emotional value. In other words, for non-fungible things, the history of the previous owners is more important than the actual “material value”.
NFTs try to transport this concept from the physical world to the digital world, cyberspace. This is based on the same technology as most cryptocurrencies, namely with the help of a blockchain, which can assign a clear time course to the digital objects via different “owners”. The first NFTs already existed around 2012 in the form of so-called “Colored Coins” on the Bitcoin blockchain, but without much hype, as there was no software for the simple generation of NFTs by normal users without programming knowledge. Over time, it has also become clear that it is difficult to impossible to optimize a blockchain for both fungible and non-fungible use cases. Since the Bitcoin community aspires to develop the best money in the world, Bitcoin’s focus has always been on fungibility, which has shifted enthusiasts from NFTs to other blockchains.
The use cases for NFTs are diverse, from the digital art trade to music creations, exchange of football trading cards to extraordinary items in multiplayer computer games (e.B. new shoes for your own Fortnite avatar) everything is possible. Many brands and artists are jumping on this new trend as many people’s lives and interactions continue to shift heavily into digital worlds and platforms. However, there are also conceptual limitations of NFTs that are somewhat lost in the current hype and are likely to disappoint those who currently see NFTs as a good and safe investment.
How can you look at NFTs in concrete terms using an example to better understand them? What knowledge and skills do you need? What limitations are currently still there and how can they be fixed? What other use cases will there be for NFTs that are currently in development or have not yet been considered?