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Here is part 5 of my 5-part series. If you missed part 1, part 2, part 3, and part 4, you can check out below:
Part 1 - Category: it is about how to categorize cryptocurrency away from other digital currencies
Part 2 - Regulations: it is about why the government wants the regulation but they cannot do so
Part 5 - Detokenization: it is about speculation that if Bitcoin actually extinct and what may happen
I may change parts depending on my research but here is for you guys to enjoy reading.
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Wait, why the title is detokenization rather than tokenization?
It depends on the position of the cryptocurrency whether it will completely replace the fiat currency as the maximalist or it will die out by itself as minimalist.
I have discussed both maximalist and centralist, I will introduce minimalist here.
The idea is that global governments will implement CBDC regulations altogether and form coalitions. Then cryptocurrency may phase out in the process called detokenization.
What is detokenization?
It is a process where the utility of crypto will phase out but the blockchain as the infrastructure may stay.
Why will valuation die out?
Cryptocurrency is censorship resistance and forgery prevention. CBDC is censorship enforcement and forgery prevention. CBDC will dominate in the future that makes cryptocurrency out of its value.
Why is CBDC more likely to win?
Fiat currency is cost-effective in transactions and less energy-consuming than cryptocurrency as Bitcoin costs almost 10 times than credit card agencies did.
Cryptocurrency adoption is slow still and fewer people will use it as money rather than security to store the value.
CBDC will dominate
Not really either. It has a problem of data privacy concerns and political issues around globalization. However, it is also possible.
What if CBDC will implement in the future
Cryptocurrency may not be able to preserve its valuation. However l, the blockchain can function what it is supposed to.
Cryptocurrency is a blockchain’s fuel
The blockchain will provide services by utilizing crypto as fuel. Cryptocurrency will be similar to your credit card amount without real value but a transaction record in the blockchain system.
Blockchain runs on the decentralized Internet
There is a way to prevent CBDC from encroaching into cryptocurrency - decentralized internet. Cryptocurrency is running in a centralized internet system which makes cryptocurrency pseudonymous. On one hand, transactions broadcast on the blockchain, on the other hand, internet IP addresses linked into your public key address. Not to mention NYC requirements on cryptocurrency exchange platforms. Decentralized internet may resolve both concerns and hide your address to become truly anonymous.
Blockchain Internet
It is possible that blockchain technology may run both cryptocurrency and the internet altogether to prevent intrusion of CBDC to collect personal data.
Shitcoin during detokenization
Interestingly, shitcoin may become more popular during the detokenization as it is speculated and people may take it to leverage the risk of CBDC.
In conclusion
Detokenization may or may not happen at all. It is pure speculation as I do not predict the future and share my opinions.
Well, I finished my 5 parts of writing and I may continue including more topics in the future. I hope you guys enjoy my articles in the series.
Photo by Hasan Almasi on Unsplash
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Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose cryptocurrencies are mentioned in this article. This information is only for educational
