Bitcoin has seen a staggering growth over the past months, and well known figures such as Elon Musk, the Winklevoss brothers, Gene Simmons, Michael Saylor, and even Snoop Dogg make sure to Tweet about cryptocurrencies on a daily basis. What surprises me though, is that sustainable projects with high potential and great values are still not being mentioned by these folks, the focus still seems to lie around Bitcoin.
While Elon Musk is one the most brilliant persons alive today, blockchain experts find it both funny and disappointing that he chooses to promote projects such as Doge coin. To Elon it’s probably hilarious to see many people invest in something without value while increasing short-term price action, but some argue that it's definitely not helping the blockchain industry as a whole.
Tesla and Bitcoin, a contradicting marriage
Cambridge researchers concluded that the Bitcoin mining (verifying of transactions by computer calculations) consumes around 121.36 terawatt-hours a year, that's more electricity annually than the whole of Argentina. In 2020 Tesla received $1.5 billion in environmental subsidies, funded by the taxpayer. Recently, Tesla invested the same amount in Bitcoin. This investment seems to completely contradict Tesla's mission to accelerate the world’s transition to sustainable energy.
What is the value of Bitcoin?
Besides the energy consumption, Bitcoin is not made to use for daily life transactions, and probably this is not going to happen either. At the moment Bitcoin is used as a store of value (or so called digital gold)
Nouriel Roubini, Peter Schiff, and other economists have been trying to warn people about Bitcoin, they say Bitcoin can't be used as a currency, and thus it has no real value. To some extent I have to agree, Bitcoin does not seem a sustainable and realistic solution to replace money, but if enough people keep storing value into Bitcoin as a replacement of the bank, then you have to also agree that there is value to it.
What the economists don’t speak about are new inventions and solutions in the blockchain industry, and because they only talk bad about Bitcoin, they indirectly paint a dark future for the blockchain industry. There are many great projects in the space trying to contribute to a better world. For example: building financial instruments for unbanked people in third world countries, so that everyone can participate in the financial system, no matter who you are from, or where you are from.
How about Ethereum?
Everyone who has been dealing with Cryptocurrencies knows that Ethereum has problems with scaling, and that the gas prices (the cost of sending transactions) are incredibly high because of a congested network, not to mention that it can take over a hour for your transaction to arrive.
The Ethereum community has been talking about Ethereum 2.0 to solve these issues, but thus far, it seems that they have the disadvantage of being such a large community. Similar to what we have seen with Bitcoin is the past, too many people are having too many opinions about what should happen, which causes innovation to delay.
Solutions to Ethereum’s overheated network
There are plenty of blockchains trying to solve the issues of scaling, some of them are Algorand, Chainlink or Polkadot and Avalanche who are trying to bridge blockchain platforms together into one interoperable ecosystem.
One project that stood out to me is Fantom, the foundation presents itself as an‘ Ethereum helper’. It’s a highly scalable blockchain for DeFi, dApps, and enterprise applications. The interesting part is that the platform uses the Ethereum Virtual Machine (EVM), this makes it extremely easy for Ethereum developers to deploy smart contracts to the Fantom blockchain. Transactions on the Fantom blockchain are 1-2 seconds, and only cost a fraction of a cent.
These types of projects will help to take off some of the load from the Ethereum blockchain, making it a better experience for everyone.
The future of blockchain
There’s no doubt that Bitcoin is currently seen as the ‘gold in crypto’, and that other projects are trying to help scale Ethereum with innovative solutions, but is there a better solution to all of the issues the industry is currently facing?
The answer could be with Charles Hoskinson, CEO of IOHK and creator of Cardano, where the goal is to build an energy efficient, decentralized blockchain, including a governance system, which can handle many more transactions compared to Ethereum at a fraction of the cost.
The interesting part about how Cardano is being developed, is that Charles and his team have been looking at blockchain technology from a first-principles thinking perspective, they first studied hundreds of scientific papers to discuss different solutions, and new proposals are peer-reviewed by some of the brightest people in the blockchain space.
Cardano also discussed options for plug and play solutions. In a few years it doesn't matter anymore what your preferred coding language is, so that for example .NET developers can code projects and plug it directly into the Cardano ecosystem.
Don’t invest in nonsense
In a bull market everyone thinks he/she is a great investor, because the project you invested in will go ‘to the moon’ 🚀 right? The reality is that only a few will stand the test of time and that the crypto market is highly volatile, so be careful.
I am personally invested in Fantom and Cardano. I believe the teams of these projects work on solid solutions and have shown great leadership, but things can change as there are many contenders out there. Who is the creator of Bitcoin again?
My hope is that business magnates, celebrities, and influencers stop Tweeting nonsense about blockchain projects. Many people have been put on a trail of losing money, as they simply invest in what influencers say on Twitter. Don't be that person, don’t believe in things blindly.
To the people that do have knowledge, try to help others, explain why you think something is great (or not) based on research and fundamentals. Try to help each other in this fast moving, complex, but fun space.
Good luck and see you next time!