Bitcoin can be polarizing. Conversations around the decentralized digital currency can often lead to disagreements about its value, especially in these turbulent days. Enthusiasts who see the potential of Bitcoin argue that it is the closest thing to a perfect currency that we have, while skeptics claim that there is no intrinsic value in the digital currency.
But the reality is that Bitcoin does have value. Its inherent properties have led to a rapid, worldwide, early adoption by people whose lives have been improved thanks to the revolutionary features of cryptocurrency. Interacting with Bitcoin is essentially a show of trust in it and the peer-to-peer network it functions on. As more people see the increase of others using and showing their confidence in the digital currency, in my opinion, it could become a symbol of what can be achieved by the trust, community and transparency that comes with its adoption.
The internet's creation was a giant leap in innovation. It allowed people to instantly move information across borders without intermediaries, eventually leading to billions of people interconnecting across the world for the first time. We may not have known it then, but Bitcoin’s initial release in 2009 was arguably just as significant, as it enabled the instant worldwide movement of value and, like the internet, didn’t require a middleman.
The digital currency's ecosystem is self-sufficient, and Bitcoin incentivizes those who interact with it to work in its favor, while miners expend processing power and are rewarded in Bitcoin. Buyers and sellers are encouraged to hold their Bitcoin due to its limited amount of tokens and the block reward becoming more scarce over time as it diminishes with each halving.
Bitcoin addresses several critical issues faced under current financial systems. A key example is a struggle faced by almost two billion people worldwide without access to banking. Thanks to cryptocurrency, the unbanked can transfer, save and spend money quickly without a bank account.
This can help bring financial freedom to areas where local infrastructure doesn’t allow access to traditional banking, turning cryptocurrency into a symbol of that freedom. Several recent crises caused by conflicts in the Middle East and Eastern Europe have shown the potential utility that cryptocurrencies (like BTC) have. Bitcoin's value lies in its ability to solve numerous problems that have plagued traditional financial systems.
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There have been comparisons between Bitcoin and gold recently due to several similarities they share. The supply of gold, like Bitcoin, cannot be artificially inflated. Both are reliable stores of value and have been used as hedges against inflation. These shared properties are why gold has long been a symbol of quality and wealth. This status led to its use as an almost universal currency for many years. Bitcoin could potentially achieve the same position considering the similarities it shares with gold.
Symbolism has a power that crypto projects are channeling to encourage token adoption. One such example is the creation and international exhibition of the Castello Cube. The artwork takes the form of a 400-pound solid gold cube, and its reveal accompanied the launch of an art payment token. The cube itself intends to unite and engage a community of artists using gold’s pre-established prestige and the current allure of cryptocurrency. The idea is that people would have a positive reaction to a tangible object representing the idea of the token. As the proverb goes, “seeing is believing.”
Cryptocurrencies are being used by a growing number of people worldwide. Some have identified their potential use, like gold, as a store of value, while they’ve gained further popularity as a convenient online means of payment.
Unlike fiat currencies, the peer-to-peer nature of crypto has more in common with the barter system that humans first used to make transactions. Two individuals trading goods or services without third-party involvement is a more personal transaction than numbers on a screen moving from one bank account to another. This could be why we have seen such a wide adoption of crypto assets in a relatively short period of time. As this adoption trend continues, we could see the use of crypto more regularly in day-to-day life.
I believe that the symbolic appeal of tokens will direct us toward a tokenized future. We can potentially use them in almost every aspect of life. It’s not difficult to imagine a world where most services are tokenized. For example, brands could tokenize customer loyalty. Instead of consumers having several loyalty cards from various companies, they could use one interchangeable token linked to multiple loyalty schemes. Brands could grant rewards to token holders at the most appropriate times.
While a customer is shopping, a store could theoretically recognize that a token holder has entered and airdrop them discounts depending on which aisle they’re in or based on their shopping history. There would be a record of all the items purchased by that holder and use smartphone geolocation to know when they’ve entered. The speed of blockchain transactions means that each token holder could receive personalized loyalty benefits instantly, and publicly recorded transactions would ensure fair and transparent loyalty systems.
We could apply the principle to even more aspects of life and reach a point where a person's entire life could be consolidated into a token. Any services or goods we pay for could be tokenized for our convenience. NFT gym memberships and crypto travel agencies already exist, and there are already instances of other types of tokens, including gift cards, deeds and titles.
We have used these for years and using blockchain technology, we could ensure that forgery would be impossible. If these trends continue and the global adoption of blockchain and tokens goes mainstream, we may eventually reach a point where most of our transactions are tokenized. A future where all of our daily interactions would be recorded on the blockchain and subject to its transparency.
Sheraz Ahmed is the managing partner of STORM Partners and co-executive director of the Crypto Valley Association.
This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.