From speculation to fake swords, cryptocurrency struggles for a use case

At the corner grocer in a small town, my small town, there is a slot machine that allows you to buy Bitcoin
BTC
. It gathers dust. I have never seen anyone use it.

Yet, of the hundreds of cryptocurrencies that populate your Gemini account, Bitcoin is the one with the best use case. You could buy Teslas
TSLA
with that. Now you can’t. In Florida, you can buy real estate with. Cipriani Residences Miami, a new luxury condo project, has partnered with FTX, a cryptocurrency exchange company, to begin accepting all major cryptocurrencies to purchase property there.

“Bitcoin is the leading cryptocurrency due to its brand recognition, market capitalization and daily volume,” says Jose Arnaiz, CEO of Realverse in Valencia, Spain, an augmented reality solutions company that creates charts used by boaters. “The problem with Bitcoin for the use case is that it’s not intended to support small, fast payments,” he says, adding that the Bitcoin Lightning Network could solve part of that problem. It has been under construction since 2016.

Other parts, like Lumens for the Stellar (
XLM
) open-source fintech network, is believed to be used for remittances, although I haven’t seen any data on how this is actually used or if it is increasing.

“Where the ripple
XRP
is likely the future of institutional and financial money transactions – potentially replacing SWIFT – Stellar fills the gap between peers enabling fast and extremely affordable transaction fees (less than a penny) to send money from person to person” , says Rodolphe Seynat, co-founder and strategic investor in a company called Serenity Shield in Belgium. They are developing a secure decentralized solution to protect access to lost digital assets.

Ethereum (ETH) is used to pay for transactions and other fees on the Ethereum blockchain. Investors buy ETH thinking they are investing in the future of the Ethereum blockchain – more users, more fees, and more demand for ETH.

Besides blockchain-based tokens being used on specific networks, what are the use cases for these coins as they struggle in a world where central bank digital currencies threaten to blow them all up, including making them illegal, as China has done, with more or less success?

The recent explosion of the Terra Luna blockchain coin
LUNA
, which is now worth $0.0001 after trading at $118 in mid-April, is a reminder that many of these coins have no real value. Space startups are always trying to change that, but so far that has mostly meant adding value to their own ecosystem. When most of us think of a use case for currency, we think: can I bite off a souvenir at my hotel with it? Can I go shopping with it? For crypto, it’s mostly about the ecosystem the token sits in – think of tokens earned in a game that can be spent on items purchased in-game or in a virtual world.

For example, Arnaiz’s token, called Coast, is intended for use on the SeaCoast mapping platform. The only way Coast token holders can buy a boat with it is if they have exchanged Coast for fiat.

Still, Arnaiz says the token can be used to secure berth, restaurant, hotel and boat reservations.

It is unknown how many of these tokens are used to make these transactions. The company said it is working on direct payment agreements with companies that will allow their token to be used outside of the Seacoast ecosystem. These agreements would expand the range of services that their investment partners Bitnovo and OK Mobility already offer in different coastal countries. In terms of ports, they told me that their goal is for some 180 ports in Spain and Portugal, run by one of their partners, to allow docking fees in their cryptocurrency. They said they would then expand to the rest of the Mediterranean and the Caribbean.

The platform is everything. The ecosystem is everything. This is the only use case, apart from Bitcoin and a few rare examples like real estate in Dubai and Miami.

take an avalanche
AVAX
for example. This replaced Polkadot
POINT
and Solana
FLOOR
as everyone’s favorite new non-Ethereum blockchain. Investors love AVAX because of Avalanche’s growth, but no one can use AVAX to buy a sandwich. (Except maybe an imaginary one in the metaverse.) Its value has dropped from around $138 in November to around $27 currently.

Why would anyone want AVAX if they don’t use Avalanche? Because it’s an investment, and that’s it.

“The reality of today’s emerging blockchain technology is that data monetization through fiat-for-services has gone further and turned to tokenization,” says Seynat. “You buy the governance token in a specific project or ecosystem because that blockchain is growing and users want or need the token to do business there no matter what.”

Chung Dao, co-founder and CEO of Oraichain, a scalable Web3 DApps solution located in Vietnam, said many current blockchain tokens offer “little outside of their ecosystem.”

The rise of decentralized finance has given some of these new coins additional utility and value over the past couple of years by allowing users to stake and earn rewards (or produce payouts) for holding the coins. rooms.

“The rise of blockchain scaling solutions is becoming a central aspect of the DeFi ecosystem,” he said of a use case for tokens related to the blockchain project. “Several blockchain teams and communities are creating technology solutions that provide users with additional value and additional utility outside of their platform. Some platforms are becoming more interoperable, forming a network over which multiple blockchains can communicate,” said he declared, naming one called Cosmos
ATOM
.

Other use cases, of course, are metaverse platforms.

MANA is the native token on the Decentraland (
MANA
) and I own it, but Decentraland crashes my computer and the one time I used it I spent hours creating my avatar and then another 10 boring minutes walking through walls alone. Why do I own this money loser? Because as an investor, I believe in the metaverse. I’m patient.

“It’s no surprise that MANA’s primary function is to power in-game purchases, but I can suggest a few other uses for it as well,” says Rafaeul Zeitunian, co-founder and CSO of Grand Time in London. They bill Grand Time as a “gig economy marketplace” where you can get paid in their cryptocurrency (GRAND), which can be exchanged for the more liquid Polygon (
MATIC
). Zeitunian says you own MANA for investment, really. “You buy it and hold it for long-term profit as the project evolves. It’s very popular right now, so there’s a chance it could become a very successful metaverse. And you own it for staking.

It seems, for now, that the only real use case for cryptocurrency is as a new investment vehicle. These coins have become a way to invest in tech start-ups that few investors understand or even use. But if exchanges like market leader Coinbase serve as an example, treating these tokens as “securities” — a new type of stock — is the only real use case, so far.

“Going forward, I see Bitcoin becoming more of a store of value than a means of payment,” Dao says. “I think businesses and corporations will add Bitcoin to their balance sheets rather than spending it on their expenses. The rise of the dollar could be the ideal replacement for Bitcoin as a means of payment given its stability, dollar-like structure and speed of transactions,” he said. “Across the globe, many crypto employees are slowly accepting USDT for payment. This could spill over to more traditional industries.

Attached
USDT
was also used for transactions between small businesses interacting between Russia and China. USDT has come under high profile scrutiny in terms of its reputation as a payment method, as a way to avoid penalties, and especially in regards to the transparency of its reserves. While the folks behind Tether insist all is well, it has seen its risks increase with the recent takeover of more than $17 billion since Luna’s death spiral, notes Ahmed Ismail, chairman and chief executive officer. management of FLUID, an AI-based intelligent order routing protocol and cross-blockchain liquidity aggregator.

“Traditional finance took decades to evolve into what it is today,” says Ismail. From the high-octane, high-risk/reward era of equity and debt markets in the 1980s, 1990s and early 2000s to the dot-com meltdown, the Enron scandal and In the financial crisis of 2008, regulators took action to protect investors by setting new standards for issuers and market participants such as investment banks and brokers to follow. These standards and rules protect the traditional financial ecosystem.

“The crypto industry won’t take decades to mature, but I think it will get there faster than traditional finance,” Ismail says.

Regulators have already started defining frameworks and rules of engagement for companies and projects. It is clear that much more is needed, especially in DeFi. In the Luna debacle, there were promises of returns that no traditional securities regulator would have allowed.

“Proper regulation that protects the interests of token users and investors will ultimately be what ensures wider adoption of crypto and more real-world use cases,” Ismail says. “It’s going to be super important.”

*The author of this article owns Bitcoin, Decentraland, Lumens and Polkadot

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