As most of you know, tomorrow, October 19, Bitcoin ETF is set to debut, marking a firm position of support for crypto by the Security Exchange Commission. Despite numerous pending issues surrounding the global expansion of cryptocurrencies, the SEC seems to have moved decisively into Bitcoin’s corner. It is easy to imagine what this will entail for Bitcoin - with some zealous commentators already announcing 168k peaks by springtime - but for everyone with diversified interests in the world of cryptocurrency, the challenge now will be to anticipate how this will reverberate out into the DeFi universe. What steps should we take now to stay one step ahead?
Of course, I am not psychic, nor even that insightful, but there are three issues that we need to take into account as we try to contemplate the near future of crypto.
Nationalization
The power of crypto has been acknowledged on a national scale by the seemingly contradictory moves of China and El Salvador - both recognize the power and are attempting to leverage it to suit their own interests. Assuming China doesn’t reverse its sweeping condemnation of DeFi, we can assume that Russia will follow course in its attempts at squeezing crypto into the margins of the economy. Of course, tech-savvy traders will always find ways around national firewalls and prohibitions, the main aim will be to keep crytpo out of the hands of common people. Countries with a firm grip on their economic sector will of course trend towards regulation. This power, of course, is precisely what countries like El Salvador are banking on - for the currency to work for itself (and the people) in ways that the central banks of small countries simply cannot. Much has been written about China, Russia, El Salvador, and the use of crypto for struggling economies, but it might be more interesting to investigate what is happening in countries like South Korea and Finland. For example, the Korean-based currency Klaytn, an Etherium competitor, might strike a fine balance for the Koreans that will allow certain regulation and taxation to take place without strangling the natural growth of the currency. Klaytn has been boringly stable since the summer, but watch this coin as geopolitics and crypto-economics become more entwined in the coming years
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Normalization
Back when Musk went on SNL and kids making sandwiches at Wholefoods were dumping their paychecks into Dogecoin at 62, some laughed, but it marked a turning point. There is nothing elite about DeFi anymore, and it is becoming more and more common by the minute. Of course, most of us are cheering the trend, but holy crap - can anyone imagine their grandmother using gate.io? I would love to see the stats concerning the average number of windows and passcodes being juggled in an average hour of converting dog meme coins into other dog meme coins. Crypto has an interface problem, and this is a serious bottleneck for any type of expansion. Saitama Swap is making some noise on Twitter, but honestly, their design looks incredibly clunky. In terms of new projects that are attempting to address this, the strongest I have seen is Avakus. The app is in beta testing now, with a rollout in November, but so far it looks damn solid. The project is still small, so might be a great time to get on board.
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Environmental Concerns
The planned Amazon headquarters in NYC was brought down by the same loose group of activists that is now moving heavily against Bitcoin farms in the city. Recent legal challenges are just the beginning. Just as investors begin trading Bitcoin on the SEC, a few miles into Brooklyn, and the farms producing the coin are being threatened with closure. This is a complex argument, and either side would do a disservice to try and simplify the situation. Having said that, though, look for environmentally-friendly coins that avoid simple Greenwashing (Chia, anyone?). The trick, of course, is that finding environmentally responsible coins will also entail locating more user-friendly projects. It isn’t a coincidence that Etherium produces mountains of waste and costs mountains of gas. For my money, Solana looks increasingly attractive. I am also sticking with Cardano, even though it has its detractors. No matter your stance on the issues, streamlined projects will be efficient. Invest accordingly.
These three areas, of course, each merit sustained discussion in their own right, and I am certainly missing things (which I hope you alert me to in the comments). I’m sure we will all have a lot to think about after this week. Let’s hope it’s a good one!
Stay Gold
