When Satoshi Nakamoto emailed Hal Finney describing what was then called e-cash, neither of them could have foreseen the events of 2017-2018. Though they may have hypothesized on ways the technology might change the world, they didn’t predict the advent of altcoins, smart contracts, or the use of Bitcoin’s underlying technology, the blockchain, for things beyond digital currency.
The State of Affairs
Today, cryptocurrencies are worth a fortune and have bootstrapped many people into riches overnight. Crypto Aficionados, computer nerds, and futurists see cryptocurrency as an invention that will change money as we know it. Nonetheless, for many mainstream economists, governments, and bankers, this catalyst for change is epithetical to fraud on its deathbed.
From Warren Buffet calling bitcoin “rat poison,” to Elliot Management describing cryptocurrencies as “one of the most brilliant scams in history,” the crypto ecosystem has not received a warm welcome from the mainstream. In contrast, Blockchain technology has been embraced by companies like IBM, JP Morgan, Microsoft, and many other old guard institutions. Cryptocurrencies, however, are getting sexier and can no longer be ignored.
The ‘Big Guys’ Taking Note
When J.P Morgan Chase Chairman and CEO Jamie Dimon apologized for calling bitcoin a fraud in January of this year, it indicated to the community that big names are beginning to recognize the power of cryptocurrencies. Though mainstream support for ‘blockchain without cryptocurrencies’ has not stopped, it’s severity has lessened, with many who had previously rejected the currency entirely now showing interest in crypto investments and trading.
The notion that cryptocurrency is a fraud, but blockchain “lays the golden egg” is evolving. Apart from being an investor in the crypto space Jack Dorsey, CEO of Twitter and payment company Square, said in an interview with The Times in March 2018, that “the world ultimately will have a single currency, the internet will have a single currency. I personally believe that it will be bitcoin.”
The ‘Big Guys’ Taking Action
Established economic institutions and players are moving beyond merely issuing cryptocurrencies public praise and towards investing in projects within the ecosystem.
In March 2018, Jack Dorsey participated in a funding round that accumulated $2.5 million for the blockchain leveraging open protocol layer Lightning Labs. Dorsey used the payment company Square, for whom he is the CEO, to test Bitcoin’s Lightning Network, opening the doors to bitcoin services in Wyoming with the intention of expanding to New York City once they acquired a “BitLicense.”
The story doesn’t end with Dorsey. After raising $75 million in Series B funding in January this year, Ledger has likewise gained the trust of Tech Giants. At the Blockchain Summit held in Morocco in July, Sergey Brin revealed that he is an Ethereum miner.
As the cryptocurrency market grows more attractive, mainstream actors will follow. The question, however, is what drives them; the money or the technology?
Money vs. Technology
Money to be made is likely both what pulls established institutions and players into the cryptocurrency ecosystem and keeps many crypto traders and investors engaged. With more than 1600 cryptocurrencies in existence today with a market cap of over $248 billion predicted to reach $4 Trillion by 2020, it is only a matter of time before mainstream institutions and companies that once bashed crypto come investing. But not everybody is in it for the money alone.
Apart from serving some as a purely money-making ecosystem, many embrace cryptocurrencies as a replacement for the flawed FIAT money we use today. As Tyler Winklevoss, Co-creator of Facebook and a top investor in Bitcoin put it; these people view crypto as a value-store and “mathematical framework that is free of [the] politics and human error” of FIAT.
As the crypto community matures its market cap and user base will increase, attracting mainstream institutions and individuals in the process. Regardless of whether mainstream adopters are motivated by the opportunity to make money or the realization of this technologies potential, their participation will advance the crypto ecosystem.