Money is not a panacea-as the prices of Bitcoin and NFT have fallen, use cases have expanded | Justin Roberti | The Capital | June 2021
In its short history, the crypto world has been looking for a reliable use case to prove the viability of Bitcoin as a currency. In El Salvador, it seems to have found a use case of real scale.
On Wednesday, El Salvador, a Central American country with a population of nearly 6.5 million, passed a new law making Bitcoin legal tender. The law is called “mostly iconic,” but it does represent some real changes in practice.
Other countries have previously considered Bitcoin as an effective payment method-but El Salvador was the first country to make it legal tender. Bitcoin can now be used to pay loans and taxes, and there will be no capital gains tax on converting Bitcoin into other currencies. If the technology is available, businesses in El Salvador must accept Bitcoin.
Nearly 70% of El Salvador residents do not have a bank account and need to use cash (meaning U.S. dollars since 2001) to pay bills, loans, and taxes. This situation can be solved with cryptocurrency. Residents of El Salvador received USD 6 billion in remittances, mainly from relatives living abroad. Using Bitcoin will greatly reduce costs and make it easier for Salvadorans to send and receive money globally.
In an exclusive review of Benzinga Crypto, crypto promoter, entrepreneur and philanthropist Brock Pierce was appropriately motivated.
“It’s amazing to see elected leaders recognize and recognize the important role that technology and innovation play in creating a better world and future. The President of El Salvador apparently, like Miami Mayor Suarez, tends to recognize that change is eternal in the universe. It’s not about whether it will happen, but how we adapt to it,” Pierce said.
In his comments, Pierce alluded to people’s concern that Bitcoin is too volatile in its current state to be a viable national currency. The price of Bitcoin rose and fell sharply in 2021, and May 2021 was one of the worst months on record, with the price falling to just over US$31,000. Pierce believes that the advantages outweigh the disadvantages, and El Salvador’s move is the beginning of a trend.
“I think this is the beginning of a series of countries doing this. Paraguay has announced that they are seeking to do so, Nicaragua is seeking to do so, and Mexico has somehow announced that they are seeking to do so,” Pierce said.
Analysts worry that the Bitcoin announcement may jeopardize El Salvador’s discussions with the International Monetary Fund (IMF). El Salvador is seeking a plan of more than $1 billion through the International Monetary Fund, and a parallel currency with such high volatility may put the economy at risk.
In an interview with Benzinga, Capital.com’s founding investor Viktor Prokopenya saw potential benefits but also some possible problems.
“(President) Nayib Bukele’s decision is ultimately a symbolic decision. The underlying message is to help the crypto industry effectively support democracy; a win-win situation,” Prokopenya said.
“The imminent problem is that the inevitable tensions between cryptocurrencies and large governments will continue to intensify: as democratized transactions become irreversibly more popular, cash flow into the government will be hindered. Eventually something will have to Concessions, and given that many large central banks are currently hostile to cryptocurrencies, this will be a major financial event that will have an impact for years, if not decades.”
President Bukele of El Salvador has increased his appeal to the blockchain world, inviting investment in crypto companies, providing citizenship to anyone with a certain amount of bitcoin, and announcing the development of geothermal solutions to provide environmentally friendly bitcoin mining in El Salvador power.
It may be a bear market for NFT
Non-fungible tokens (NFT) have become another rising star in the crypto world in 2021. Of course, it is not as well-known as Bitcoin, but it is working towards becoming a household name. Notable events such as the sale of Beeple’s digital art NFT at Sotheby’s for $69 million have aroused enthusiasm among the media and investors. At least for a while.
According to a report from primitive, The NFT market reached its peak on May 3, 2021, with sales of 102 million U.S. dollars on that day, and total sales for the week exceeded 170 million U.S. dollars. In early June, NFT sales fell to 19.4 million U.S. dollars, a decrease of 89% from the previous month.
In an interview with Benzinga, TechCrunch and Arrington XRP Capital founder Michael Arrington (Michael Arrington) said that sales figures are not the focus of NFT.
“I don’t think price is the decisive factor of NFT. This is a brand new model. It was originally a niche product, almost a toy-like many great products. Now, NFT not only wants to change the cryptocurrency world, Also change the real world,” Arlington said.
Arrington cooperated with Propy to provide “the world’s first real estate NFT”-his Kiev apartment, which has become the first property sold on the blockchain in 2017, and the price is nearly 5 times the initial bid , Which is $94,000 higher than the market price.
“NFT will definitely stay. I want to distinguish between price and value. The true value of NFT lies in innovative and exciting new ways of investing and building the future. The possibilities are endless,” Arlington said.
Chintai co-founder and chief operating officer Ryan Bethem pointed out that although NFTs have unprecedented popularity in 2021, the price adjustments surrounding them are not unprecedented.
“This is not the first time that NFT sales have experienced such a cycle. NFTs tend to change with macroeconomic conditions. Crypto cats are the first major breakthrough of NFTs in the 2017 bull market and herald the recent recovery. We will say this It has to do with reducing hype, but more about market recalibration-this also happens in the macro realm of cryptocurrencies. However, this time NFT has penetrated into the public’s consciousness and the use cases are more tangible. Once the dust settles, better The use cases and applications will continue to exist,” Besham said.
Jack Fonss is a cryptocurrency innovator. He is currently auctioning the first patent packaged as NFT. He believes that although the initial hype may fail, NFT has a strong future.
“I believe that the novelty of the NFT format has attracted many early adopters and enthusiasts, so many early activities are experiments, and some are hype. But I expect that the long-term benefits of this experimental phase have already given users to the technology and platform as well as many laws. Feel satisfied with consideration-this is important for NFT’s next move.”
Brent Bucci, vice president of communications at Overprice.tm, said in an interview that to see the true motivation of NFT buyers, one must go beyond price.
“When it comes to the motivations of individual NFT buyers, a huge misunderstanding is happening: The motivation for most personal NFT sales is A. Buyers who want to “show off”-see it as the Rolex of the cryptocurrency generation, or B. Have a strong connection with brands or artists. For companies, in addition to the possibility of using NFT as an identity validator for real-world goods, there is also a huge opportunity to enhance their brand relationship with their most loyal customers. Institutional investors should really only consider some well-known NFT options to hold their portfolios,” Butch said.
Sheesha Finance Communications Director Akasha Rose predicts that as NFT changes the way users interact with artworks and collectibles, the market will eventually grow.
“In my opinion, the encrypted art market will only increase. In the past, only elites had their own private galleries. Now, anyone can have their own private gallery on their mobile phone and transfer their NFT in their own home. Private art collections are regarded as augmented reality. Just like we are reading books on Kindle instead of on paper, in the future we will appreciate art on the wall through mobile phone screens instead of printed materials or physical frames,” Ross said.
Dino Lewkowicz, director of 4ARTechnologiesAG, pointed out that art investment is usually not speculative in nature, and this period of price adjustment may ultimately be desirable.
“Investment in art and collectibles is not highly speculative because prices do not fluctuate significantly. The value of Gerhard Richter or Ferrari 250GTO will not triple in a year. They increase by an average of 10 per year. %. A stable investment with limited risk. At the end of 2020 and early 2021, NFT is purely speculative and the price is astronomical. Beeple’s artwork has risen from 10-15,000 US dollars to nearly 70 million US dollars. This change is obviously unsustainable. Transient The speculative gold rush seems to be over, and the market is now returning to real investment value. This makes them more interested in institutional investors, not less, because it is no longer a gamble, but a calculable investment. “Lewkowicz said.
The regulatory dilemma of NFTs
Although there are disagreements on when and how NFTs are regulated, the consensus seems to be that they will Yes Be regulated-but in the end this may not be a bad thing.
Peter Klamka, CEO of MORE Brands said:
“If they fail the Howey test and are promoted as an investment, they should be regulated. If they are used and/or collected by fans, then they are not securities. Just because something appreciates does not automatically make They become securities. The value of trading cards will rise or fall, and they are not securities. Retro concert T-shirts appreciate and they are not considered safe. Context is important.”
TrustSwap CEO Jeff Kirdeikis advised NFT creators to seek expert legal advice when developing projects.
“In most regions, NFT regulation is still a gray area… Previously formulated guidelines in certain countries have indicated that cryptocurrency-related sales are obliged to consider income tax or sales tax. Therefore, the obligation of NFT traders depends on the jurisdiction It varies from region to region. We expect that guidelines for cryptocurrencies and NFTs will be developed in the next few years. Currently, the ideal way for investors is to seek advice from legal experts on the handling of their digital assets,” Kirdeikis said.
Of course, the suggestion is reasonable, but the regulatory structure is still changing, so there may be more shocks.
“We expect that when governments around the world begin to add forms of regulatory compliance to certain forms of NFTs, they will see a very disruptive transition period. This will cause many first-mover markets to be unable to adapt, and new entrants will have the opportunity to adopt Digital asset compliance solutions and quickly provide NFT migration solutions. Like the regulations imposed on ICOs, we can expect to see compelling legal cases, fines, and even some arrests in regulatory framework blockchain solutions such as Chintai At the same time, the industry is maturing, which also helps to promote meaningful mainstream NFT use and adoption,” Besham said.