There are still a large number of people that are judging the success of 'all' blockchain technologies using the overall success of cryptocurrency market valuation as their chief indicator. Contrary to popular belief, the future of blockchain technology does not rely on the success of cryptocurrencies, and the simple explanation for this is that not all blockchain technologies need cryptocurrencies to succeed.
Two examples of blockchain solutions that do not use a cryptocurrency or a token are IBM’s Fabric. and R3’s Corda. The way both systems have been designed means they do not need tokens because these systems do not need miners or proof of work to function. Also, not all tokens need to have a market valuation attached to them.
To explain further, there are two types of blockchain based businesses. Some blockchain solutions use ICOs to issue a digital currency attached to its ecosystem in order to raise funds, which in this case success can be judged ONLY by the increase and decrease in the value of its crypto. However, there are also a large number of blockchain solutions that do not have a cryptocurrency attached to them such as the aforementioned IBM’s Fabric. and R3’s Corda.
If the entire success of blockchain technology relied on the overall market valuation of all cryptocurrencies, then Dubai, looking to become the first blockchain-powered government, would not be investing so heavily in search of blockchain solutions to revolutionize the city. Quite simply, the UAE is not going to bet its entire capital city’s economy on a volatile cryptocurrency market. Instead, Dubai’s bigwigs see the potential of the technology that created cryptocurrencies, which is blockchain's ideology as a disruptive software that creates innovative solutions.
Along with Dubai's aspirations to become a blockchain powered city, by 2025 a large number of enterprises are also expected to have some form of blockchain solution deployed. Regardless of whether solutions being deployed are backed by an ICO or via private company such Microsoft or IBM, companies will choose solutions that will benefit their business operations, which paves the way for both ICOs and private companies offering blockchain-based systems.
What is clear is that blockchain technology is being deployed globally in numerous industries already. Some of the reasons these businesses are choosing blockchain solutions is security, the decentralized model, immutable ledgers, fast transaction speeds, reliable smart contracts, increases in IT system efficiency, cost savings, and no loss of data. These advantages seem to far outweigh traditional centralized IT systems..
When blockchain tech proves its worth, then a flurry of large businesses will follow suite. For instance we recently covered a news report about MasterCard getting involved in blockchain technologies. Add big names such as Microsoft Azure, IBM, Amazon, and Oracle to name but a few offering what is called enterprise blockchain solutions., and blockchain technology is well on its way to becoming the norm of IT systems.
As a result, blockchain tech looks as if it will become mainstream/ This means that many medium to small size businesses that cannot afford enterprise solutions will be looking at alternatives, and those alternatives are likely to be solutions created by ICOs with a cryptocurrency attached to them. Consequently, this could spell the survival of cryptocurrencies.
Digital assets, currencies and blockchain software solutions have been around for long enough now, so surely the world;s population is educated enough to understand the underlying differences and the connection? It seems that this is still not the case, and these terms are still incorrectly being used interchangeably. That said, arguably this probably a good thing for the time being.
In fact, most people only began to acknowledge cryptocurrencies when BitCoin made its December 2017 surge close to $20,000 per BTC.
The key differences are:
· Cryptocurrencies are tied to the success of an ICO
· An ICO is very similar to an IPO in the stock market
· Blockchain technologies are independent ecosystems
· Digital assets are something of value owned someone on an ecosystem
· Blockchain technologies are not cryptocurrencies so to speak
In essence, a blockchain ecosystem is a software solution, and solutions solve a problem. An IT-based solution can be designed and implemented independently. However, some blockchain companies use an ICO (Initial Coin Offering) to raise funds/backing in order to create their solution.
If a team of blockchain engineers do not need or want financial funding, then they can just go ahead and create their blockchain-based ecosystem without tying a cryptocurrency to their perceived solution.
As you can see, these are the key differences between currency and solution as well as explains why cryptocurrencies are just a byproduct of blockchain tech. Read about blockchain technologies current rising talents here.
Cryptocurrencies have picked up both a positive and negative reputation amongst the global population. There are so many different perceptions, and so when we break down how people perceive them, firstly we should look at the two extremes.
It seems that there are those that simply do not understand cryptocurrencies, and as such dismiss any notion of their potential to succeed. On the other extreme there are those that understand cryptocurrencies, how they are tied to blockchain technologies, and see the potential for success.
Of course, we are missing out on a lot of middle ground here. There are those that are on the fence keeping a keen eye on cryptocurrencies and their progress. There are those that are still learning. Plus, there are those that are undecided and those that just don’t want to understand it but believe anything is possible.
There are even those that fully understand cryptocurrencies and blockchain technologies that are against the entire concept of digital assets and digital currencies!
What we can say is that out of the two extremes, without one or the other, cryptocurrencies would most likely fail. They would not exist because if nobody believes in them, or they could end up failing due to over-popularity causing expansive growth and the collapse of something we do not fully understand and with few resources to control or regulate that growth. Much like the Dotcom crash!
You can read more about ho Bitcoin fell into the media’s eyes and became so well-known in our news and updates report “Is Bitcoin a Safe Haven For Investors?”.
One of the key reasons behind the success of cryptocurrencies is the sheer number of ICOs that are out there.
Each ICO has crypto tied to it. For example, Dogecoin (DOGE) cryptocurrency is tied to its own blockchain tech solution. The success of Dogecoin’s crypto is entirely reliant on how popular its blockchain solution becomes.
There are now thousands of ICOs each with their own blockchain-based solution. If you were to hedge your bets on just 1% of these ICOs growing into a mainstream solution, then that is at least 10 ICOs becoming as big as let’s say Amazon or Facebook.
It was exactly the same during the dot-com era. There were thousands of dot-com companies and after the crash, 99% of financial investors wrote them off. However, now look at the World Wide Web and the number of dotcoms that have become billion-dollar global giants. The few that stuck around and saw the potential for dotcoms post-market crash become overnight millionaires and even billionaires.
Now if you consider the huge number of industries out there that need a new solution to revolutionize the way the system operates, then at least one blockchain solution is going to break into that industry. Health, housing, government systems, online casinos, internet browsers, the World Wide Web, vehicle traffic control, air traffic control, law, social care, supply chains, import/export, travel and the list goes on.
Many of these industries will adopt blockchain solutions not backed by an ICO and therefore will not have a cryptocurrency. However, it is a safe bet when we say that at least 1% of ICO solutions will break into one of the many industries in need of a blockchain-based solution.
On top of this, we then have cryptocurrencies that offer fast and secure cross-border transfers of funds and assets. The use of smart contracts is fast becoming a popular way of transacting within financial institutions and infrastructure development. And right now, BTC and Ethereum are leading the way.
ICOs can only exist if the planned technological solution is blockchain-based. As blockchain tech becomes more mainstream by solving problems across multiple industries, the need for funding in order to create further solutions as well as cross-platform support between blockchain ecosystems will increase.
Inevitably this will lead to more ICOs and an increase in blockchain solutions. Existing and already successful ICOs will also start to look at the ‘next solution’ in industries they have already succeeded in. Therefore, in itself, the very success of blockchain technologies will instigate a rise in the value of the cryptocurrencies attached to those ICOs that become successful.
Of Course, there is no reason why blockchain solutions cannot be fiat currency backed. All that is needed is a team of blockchain specialists and funding to create a blockchain-based solution. That thought scares some people, but really, would this alone be the demise of the existence of ICOs? It is safe to say that with the sheer number of ICOs and the freedom that comes with being an ICO has too many financial benefits for fiat-backed blockchain solutions to wipe out cryptocurrencies.
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