Crypto will become mainstream when the large masses join cryptocurrency and it becomes an ordinary part of society.

When having and using crypto has become as normal as having and using fiat money, we can count crypto as mainstream.

This is far from being the case. In fact, we are currently in a transition phase, with governments and consumers wondering what to do with cryptocurrency.

Once developers start getting involved in how to get outsiders to start using their cryptocurrency, adoption can start to increase rapidly.

Today we are going to talk about where we are today.

• With the advent of Bitcoin, the crypto rollercoaster has begun
• Bitcoin is the counterpart of traditional parties
• The advent of other cryptocurrencies paved the way for different types of technology in crypto
• In 2018, the extreme bull market was a driver of crypto's popularity
• Centrally regulated companies such as Google and Amazon are exactly what cryptocurrency and blockchain are not
• Crypto prices are determined very differently from Real World Assets
• Collateral for crypto, number of users and scarcity determine their value
• Governments can make or break crypto
• CBDC makes blockchain mainstream
• What does crypto need to become mainstream?
• ETF and big money could make mainstream a nasty experience for ordinary traders

Inhoudsopgave

1. The birth of crypto: Bitcoin and bailouts
2. The rise of crypto
3. Decentralized or centralized?
4. The value of crypto
5. The role of governments and politicians
6. Crypto becomes mainstream

The birth of crypto: Bitcoin and bailouts

Bitcoin's Genesis block (first block of this blockchain) had a statement from its creator ( Satoshi Nakamoto ) in it:

"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks".

This text comes directly from a London Times article of the aforementioned date. After the 2008 credit crisis, banks were bailed out (too big to fail) with public money. It is more than likely that Satoshi was critical of this state of affairs and wanted to create a means in the world to bring corrupt banks, politicians and greedy middlemen to heel and offer ordinary people an alternative to it. Bitcoin was to become money of the people.

Features of Bitcoin

The name Bitcoin comes from bit and coin, where bit stands for binary digit from the computer language and coin for money or currency. Bitcoin is therefore digital money. Bitcoin's promise is "be your own bank." Satoshi wanted to create digital assets that could not be taken away from you and are without censorship. The most important feature of Bitcoin, however, is that it does not belong to a company or a government, it belongs to no one (or everyone) and is only held in a decentralized database.

Bitcoin must mined be to come into circulation through Proof of Work . This is also a great contrast to banks, which like to keep hidden how fiat money comes into circulation. Everything is recorded in a blockchain and distributed across thousands of computers, making corruption and bailouts impossible.

Bitcoin has come a long way from obscure novelty to a Bitcoin ETF of huge investment funds.

The rise of crypto

Crypto has long been an incomprehensible piece of technology for alternates. Blockchain, cryptocurrency ? The audience thought it was all fine. A few delved into the crypto world and understood that it could become very big. They are probably rich now.

The crypto top 100 consisted of just about every coin that happened to be around, with coins like Bitcoin, Litecoin, XRP, Dogecoin, Monero and a mountain of other cryptocurrencies that are slowly but surely on their way to oblivion.

Until 2015, you could do pretty little with crypto. OK, you could buy and sell it, but what function did those coins have? Crypto was mainly for speculation, according to most of the inhabitants of cryptoland back then.

Ethereum the founder

The advent of Ethereum changed this. Smart contracts suddenly offered the crypto market automation of deals that until then had been limited to the real world. This development brought the DeFi hype established, in which virtually every DeFi coin like Aave, Maker and Compound shot up like a rocket.

During this time, decentralized exchanges also became popular and investing in coins on UniSwap and PancakeSwap became a hit. Again, smart contracts took center stage.

In 2017, the ERC-20 token of Ethereum active. Since then, there has been an explosion of new tokens through this standard, because this technique allows you to launch a new cryptocurrency very quickly and cheaply. The number of ICOs has grown much larger from then on, and this is well reflected in the list we see today as we scroll through CoinGecko.

Slowly but surely, more and more token standards on all kinds of blockchains, making the prediction that the number of coins will go through the roof.

The explosion of crypto

Early 2018 is the most famous time in crypto history. Almost all coins went x10 or much more. Everyone was able to make significant profits then and the outside world suddenly wanted to know what it was all about as well. A large number of traders then entered the crypto market and also started playing the game called "investing in crypto."

Crypto has been strolling toward the mainstream ever since. There was a lot of earning and a lot of losing. People figured out that volatility had two sides.

After 2018, it all settled down slightly and x10 became the exception. The volatility curve is clearly weakening. In the current market, Bitcoin is not going to be worth half a million for a while.

With the advent of ETFs in crypto, it is safe to say that crypto has taken another big step toward the mainstream, it is no longer an unregulated investment. When anyone, without knowing anything about the technology, can invest in crypto, it is no longer a toy for nerds.

Decentralized or centralized?

The advent of cryptocurrency and blockchain has caused much concern to certain industries. What Satoshi Nakamoto wanted has actually happened now. Virtually everything that happens in the real world can now be done in the digital world of cryptocurrency.

Do you want a loan? Then enter into a smart contract. Want to sell your painting? Make it a NFT Of and sell it at an NFT market. Want to bank? Then you can buy a debit card that allows you to pay with crypto. Yet this is still a pretty niche area. Hardly anyone does these things. What is possible doesn't have to be used.

Blockchain power

This puts out of business intermediaries who can make a lot of money from you, and they are not happy about that. It's no secret that banks and professions like notaries or brokers would prefer to see crypto go away today. However, it is too late for that. There is already too much in the market to ban it yet. Moreover, various blockchains are maintained by so many computers around the world that it has become too big to attack.

Centrally managed companies have gained a formidable competitor with decentralized blockchains. So far, it has been somewhat amateurish, but those times are bound to change. Some blockchain networks have already developed a fair degree of professionalism, with Ethereum leading the way. Other blockchains are trying to achieve this as quickly as possible, such as Solana, Cardano and the Binance network.

Blockchain and Big Tech

The very largest Silicon Valley companies will certainly see blockchain as a threat and will do everything in their power to counter it. Whether it is DeFi, fiat money , advertising, banking, social media or whatever else is going on, Silicon Valley will want to stay ahead of these crypto networks. Facebook has already changed its name to Meta and that is no coincidence. Meta wants to Web3 and the metaverse in and make a lot of money from that, but of course without the decentralization, because that doesn't bring in money.

The return of centralization in crypto

The biggest contradiction in the mass adoption of cryptocurrency exists between decentralized and mainstream. The more decentralized something is regulated, the less mainstream something tends to be. As long as crypto and blockchain are decentralized regulated, its charm is very appealing. If something becomes massively used, the charm will soon be gone. Probably then there will also be a big wave of centralization in, on the one hand, ownership of the major coins in just a few hands and centrally regulating the operation of the major coins for the benefit of the holders of those crypto currencies.

The value of crypto

Tongues often loosen at that. Some swear that the value of crypto cannot be underestimated and others claim that it cannot be overestimated. Bulls and bears are everywhere!

The Tinkerbell Effect

The value of cryptocurrency is sometimes compared to the Tinkerbell Effect. Tinkerbell exists because so many children believe she exists. Crypto has value because so many people believe it does, and the more people believe in it, the more likely it is that the value will rise because of increasing demand.

The use value of crypto may be great in some cases, but the intrinsic value in most cases is 0, in other words what the fool gives for it. If someone wants to pay a million for 1 Bitcoin, be our guest. That said, they are just numbers on a blockchain.

Well, that's very reminiscent of your bank account these days. Those are also just numbers in a centralized database.

Crypto and fiat money

A digital crypto-currency does have a big advantage over fiat money, unless its supply is unlimited. A digital currency either has real world collateral, or it has a limited supply. Because of this, it beats fiat money with ease, because of that the money printer is always on. Thus, you could think of Bitcoin as digital gold, because scarcity creates value. With this, you could inflation can cover.

One of the strongest parts of crypto is actually the blockchain. Because it is maintained by thousands of computers and cannot be changed, it is a system that is much less prone to corruption than centralized systems that can be changed and are maintained by only one entity. Blockchain is also borderless, so you can use most coins instantaneously in virtually any country, which is a lot faster and cheaper than settling in fiat money, which you have to exchange first.

This gives crypto a strong user value. Another aspect is the elimination of the middleman, so this can provide a lot of value to the user. So it is safe to say that the value of crypto is definitely not 0.

The advantage of blockchain can also be a disadvantage. The irreversibility attracts criminals who want to scam traders with no experience by using what they do know against the inexperienced trader, such as phishing or pump and dump . Some action is being taken against it, but sparsely. This still stands in the way of mass adoption.

Number of users determines value

Most value systems are built on the number of users something has. If Facebook had a hundred users it was worth virtually 0. If a bank has ten customers their shares aren't worth shit either. If your dApp has 1 million users it is certainly not worthless. This, of course, also applies to cryptocurrency. The more users, the more value a crypto has. As a payment system, crypto could suffice just as well as what we have now, but so far this has all been somewhat cumbersome in cryptoland.

The market value is determined by supply and demand, which is the case with any product. In that respect, crypto is really not an odd phenomenon. Stocks form their price in exactly the same way, the fact that crypto is "different" does not make it exceptional in terms of the market. The more money is put into crypto, the more this market is likely to resemble the stock market. Less volatile and more precise in determining the value of a cryptocurrency.

Mature crypto market

Opponents will certainly argue that coins like Dogecoin or Shiba Inu are worthless and give the crypto market a bad name. Who am I to contradict them? In my opinion, this is because the market is not yet mature enough and there are still too many "amateur traders" who understand nothing or little at all about cryptocurrency and blockchain and thus buy easy-to-understand coins.

Many people also see crypto as a balloon that is inflated very slowly until it explodes. With the advent of ETFs, this prediction might also come true, as huge mutual funds might well set the intrinsic value of a coin like Bitcoin or Ethereum to 0. The market value of these funds' other assets, such as gold or stocks, do have intrinsic value according to known market prices. The question then has to be why they would want to put money into it at all.

The role of governments and politicians

For a very long time, the government and politicians against cryptocurrency have applied a laissez faire (let it go) technique, perhaps hoping for an implosion and the retreat of crypto and blockchain.

As time went on, governments did recognize that this would not go away, quite the contrary. There was more and more money in the crypto market and its popularity was growing. It was inevitable that politicians would have to come up with something.

Regulation of crypto

Rules were established for mining Proof-of-Work coins, such as Bitcoin. This banned Bitcoin mining in China, exactly where it was widely done. Trading in other crypto coins was also tightened, especially again in China, but also in other countries. So in times of collapsing stocks, you can't just relax in China and convert that money to crypto.

Politicians did recognize that crypto was widely used to launder money by criminals. Little by little, they came up with rules like Know Your Customer, Anti Money Laundering and rules to combat terrorist financing. Many countries have also banned privacy coins like Monero, because these coins shield the origin of coins and their owners. Black markets are much less frequented by crypto owners.

At one point, firm laws were rigged, such as the MiCA law , with which crypto in the EU is pretty much shuttered these days. There will certainly be more legislation, but the time of laissez faire is passé. Many countries tend to lean rather to the negative side when it comes to crypto, mainly imposing restrictions.

Bitcoin as legal tender

Still, there are some countries that are completely on board with the rise of crypto and have even made it a legal tender, as El Salvador and the Central African Republic have done with Bitcoin. This list is sure to expand, although the largest countries will likely be the last to do so, as their own currency will then face competition from cryptocurrency.

Central banks and CBDC

In turn, what governments and politicians find very interesting is CBDC (Central Bank Digital Currency). Probably the least popular variant of cryptocurrency ever for ordinary traders. CBDC is therefore not actually a commodity, but a stablecoin that is also issued by a central bank, an extension of the government. That does give it real-world value.

In times when politicians and the government are rather distrusted, bringing to market a digital currency that can be programmed in such a way that you can track every transaction of your citizens and even decide as a government what you can and cannot spend it on might not be such a very good idea, even if the government does not intend anything obscure with it at all.

It is true that if this crypto coin is issued by a central bank but has to be deposited with a commercial bank and you cannot accumulate it because of a maximum number you can have, you may wonder for what purpose you are starting it in the first place, except for reasons mentioned above.

What is clear is that blockchain has apparently crept into the mainstream with the most mainstream organizations out there: banks and politics. Apparently some of them have read our article on what a blockchain and cryptocurrency really are after all!

Crypto becomes mainstream

To become mainstream you also need mainstream user experience. And with that comes the need to have mainstream payment methods, such as PIN payments with Bitcoin, iDeal transfers with crypto, in other words, crypto must become like other payments. As long as you're still using wallets works very differently from bank accounts, ordinary users need to know too much about the process to become mainstream.

If you select the wrong network, you can lose everything you send. Details like these mean that crypto trading is by no means a risk-free experience as we know it from very popular apps like iDeal or debit cards.

Mainstream adoption crypto

The more the experience of crypto use is going to resemble the experience of ordinary consumers, the more mainstream crypto is going to become. One of the things crypto will have to undergo to gain mainstream adoption is the end of those big price fluctuations. The market cycles have to come to an end. The question, however, is whether the crypto market is waiting for this. If you like to play safe, you have plenty of choices in mainstream banking, stocks or fiat money, right? The charm of crypto trading is precisely that it is an investment where you can win a lot and quickly or, unfortunately, lose. No one is going to "invest" in the euro.

Regulation can help crypto become mainstream, but it can also cause crypto to become a lame dodo that no longer moves forward. Innovation can then be stifled by governments and politicians who don't like crypto. The SEC, EU politicians, central banks and other regulators can throw sand into the machine, but they can also throw oil into it.

MiCA is one of the better thought-out laws on cryptoregulation in the world in recent years. Users will be better protected and intermediaries such as brokers and crypto exchanges should be more responsible. Crime should also become less with this law. Innovation may become a little less because of this.

Regulation as a deterrent

One of the biggest concerns in the world of crypto is if trading crypto is not seen as wealth building, but as a kind of game of chance with associated taxes for every trade. This would completely shut down crypto trading, because it is hard enough to make a profit with enough patience, but if you have to pay VAT or gaming tax or something like that on every trade, it has become almost impossible to make a profit anymore, even with angelic patience.

In that case, mainstream means deadstream. No one is going to trade purely to fill a country's coffers.

Bitcoin and Ethereum ETF

With the advent of a Bitcoin ETF, Bitcoin is already very mainstream. Since then, the value has been dropping. How can that be? Surely there should be more demand then? Assets that are mainstream take information from the market and incorporate that into the price. If that information says Bitcoin has no intrinsic value the price can start to drop. Because Bitcoin has become mainstream it is also no longer an outsider rebelling against banks, governments or otherwise. It has become part of Wall Street, banking and big money.

When an Ethereum ETF comes after that, a lot of crypto that is part of the Ethereum ecosystem actually becomes mainstream. The two together account for about 70% of the market capitalization. Companies like BlackRock or Grayscale , which hold multiples of the total market cap of crypto, could well become the deciding factor in the price of Bitcoin and Ethereum. As a result, the fluctuations of the past may well come to a halt and these funds will begin to determine the price from now on.

The burning wishing well

So the question is whether crypto becoming mainstream is that positive for cryptolovers. If it becomes a plaything of the rich to get even richer, yes, then it has become a bit very mainstream, don't you think?