Runaway Time Comment: Initially, it was Bitcoin. The emergence of Bitcoin gave birth to a new industry. Encryption field. Blockchain world. Bitcoin has given birth to thousands of new assets and new forms of interaction with these assets.
Author: Jill Carlson | compiled by: Maya | Source: CoinDesk
Bitcoin achieves these two things. It created a new form of currency: neither a central bank nor collateral was required. It can prove to be scarce, and only at the disposal of the code and the person who wrote and runs the code.
It also created new ownership and transaction models. This new model does not require third parties or middlemen. This means that anyone can directly control their assets and transfer them in a purely peer-to-peer manner. A new form of currency. A new ownership model.
The emergence of Bitcoin gave birth to a new industry. Encryption field. Blockchain world. Bitcoin has given birth to thousands of new assets and new forms of interaction with these assets. Although innovations in both assets and infrastructure often occur at the same time and often under the same banner, they should not be confused. New assets do not necessarily create new experiences in ownership and trading. Likewise, new models of ownership and transactions do not always require new assets.
CoinDesk columnist Jill Carlson is the co-founder of the Open Money Initiative, a non-profit research organization dedicated to safeguarding the rights of a free and open financial system. She is also an investor in Slow Ventures, an early-stage startup company.
For a long time, Bitcoin has marked the birth of a new asset and the invention of a new infrastructure. This fact has long been confusing and has caused confusion between the two. And now is the time to start noticing the difference between the two.
Although this industry rarely realizes this, it is always oscillating between prioritizing the creation of new assets and prioritizing the construction of infrastructure.
From 2013 to 2015, altcoins such as zcash, Monero, Ethereum, Ripple, Litecoin, and Dogecoin have appeared one after another. These are all representatives of new assets. Basically, some of the new assets also provide users with new ways to interact with assets, as well as other new aspects: such as privacy and programmability. But there are also some assets that have nothing but marketing. There are many bags in the cryptocurrency space that are uncertain what to do with.
From 2015 to 2016, the industry learned a lesson and understood that not all new assets are valuable. A lot of the industry’s interest has turned to building new infrastructure around old assets. The entire enterprise blockchain industry was born. Companies such as R3, Chain, Symbiont, and Digital Asset are focusing on reinventing traditional financial products such as stocks, bonds, derivatives, and swaps.
These companies avoided the challenge of creating new assets. However, the problem they encounter is even greater, that is, how to create new, P2P-based ownership and transaction models around the old asset classes that rely on rich and powerful third parties today.
Tired of these difficult tasks, the collective attention of investors and operators has returned to new assets. As we all know, 2017 and 2018 are the year of ICO: initial token issuance. Tezos, Polkadot, 0x: Similarly, some of these new assets also provide a fundamentally new experience for their owners.
But many other projects—there are too many to mention—do not do this. They squeezed a lot of value in an unprecedented form of fundraising, but in most cases—even when the network is online and assets are issued, the value they create is not much. The corresponding consequence is what we call the “crypto winter.”
Then, in the past two years, we will see the wind turn back again to innovation around infrastructure and ownership and trading experience. The rise of decentralized exchanges, new competitions among wallet providers, and the birth of blockchain-based lending agreements. All of this, similar to the previous enterprise-level application craze, is actually an experience of how we interact with assets to a greater extent, rather than an attempt to create new assets.
This kind of decentralized finance experiment has proven to be quite effective in many ways. People, despite the current limited number, can perform two-way, purely digital transactions for the first time, without having to rely on a centralized third party for custody, protecting their assets or providing liquidity. The main limitation of this new infrastructure lies in the fact that many compatible assets have so far failed to demonstrate basic, durable, and long-term value.
At present, we can see such a cyclical and vacillating pattern: innovating encrypted assets, discovering challenges, turning around to develop blockchain infrastructure, encountering roadblocks and then returning to encrypted assets. Soon (maybe even faster than I expected), we will see the swing of interest returning from infrastructure to innovation around the asset itself.
In fact, we can already see such signs in the DeFi world. A good example is Uniswap (an infrastructure project) issuing tokens. The emerging communities and governance tokens more generally show the continuous exploration of ways to issue new decentralized assets with basic value. The resurgence of attention to non-fungible tokens (NFT) and the huge attention gained by some NFT tokens that are mainly co-branded with artists, all hint that the market is again shifting to an asset-focused direction. The renaissance of the dialogue about “initial country/currency issuance” and the central bank’s digital currency also represents a possible direction for transplanting real-world values into the digital local blockchain. I also suspect that this kind of exploration will bring market interest back to Bitcoin, which is one of the few crypto assets that seems to have proven its value.
