“The NFT and the DeFi are synonymous with the long term success of the cryptocurrencies”
The most exciting year of the cryptocurrency market yet was 2020. Of course, this also includes that Bitcoin was able to break out from its two-year status with which it kept the market in total insecurity. It is indisputable that without Bitcoin we cannot interpret the cryptocurrency market. The most important change of recent times was the increase in Bitcoin’s price since it affects the cryptocurrency market as a catalyst. It is still clear that without Bitcoin it wouldn’t be possible to make so many successful projects. Even Ethereum draws its strength from Bitcoin. No matter the thousands of smart contracts, if Bitcoin is not strong, nothing is. Tokenization is diversifying and alongside this, a new kind of race is forming in the cryptocurrency market.
My opinion is that Ethereum and Bitcoin together give ground for the cryptocurrency market to get stronger. Formerly we could read countless articles about Ethereum and Bitcoin being the biggest rivals. Even then I thought about these opinions that they are false since it is impossible to fully compare the two on absolute value because of their functionality. We can play with the idea that what could happen if Bitcoin would be suitable for smart contracts but it is still very far from reality. So because of this let us take a look at these two projects the way they function today and let us see those opportunities that are within hands reach.
It can be seen that there are two new directions and both of them are functioning most efficiently on Ethereum. Though several articles describe that what kind of advantage Cardano, EOS, and other known projects offer for creating Dapps and tokens, still most of the users choose Ethereum accepting its high transaction fee. Why is this happening? The answer is easy: trust. The market created by Ethereum is far the biggest. It is a lot bigger than the market of Bitcoin since Bitcoin does not have a smart contract system. This position creates ground for Ethereum to validate its high transaction fees. In the decision of the users the compatibility and the interoperability play a far greater role than the amount of TX fee that must be paid in order to use Ethereum’s system. The question is that how long will this be the same?
Interestingly, no matter how widely the Ethereum system is used, the market value is still determined by Bitcoin. It is obvious that how the Ethereum fans try to maximize their profit based on the rise of Bitcoin’s price. It is clear that Bitcoin tripled its price since the all-time high in 2017, while Ethereum barely topped it. The right question is to ask about the background of this phenomenon. In other words, why isn’t Ethereum much more popular if its network is so much larger than Bitcoin’s. Why is the market not influenced by the fact that dozens of DeFi and NFT tokens enter the market daily, and more and more companies are developing their systems based on Ethereum?
The answer is quite easy. No matter how strong Ethereum is in its wide network, the trading is still defined by Bitcoin. The digital gold is still the standard and trust toward Bitcoin is far greater than for any other coin or token. Investors are concerned to enlarge their Bitcoin portfolios to hold a larger portion of the maximum 21 million BTC. This is a logical and monetarily the best approach. Ethereum does not have a maximum supply. A whole lot of people think that unlimited Ethereum is a good thing. I don’t think so, because of this the value of Ethereum is constantly devaluating.
Ethereum will never take over Bitcoin’s market-leading position since there is no need for the problematic Ethereum if there is Bitcoin. However, Ethereum is still the “token king” of the market, which means that the DeFi and NFT projects are still based on Ethereum. These projects will play a serious and substantive role in the next decade’s market changes. This is different tokenization than what happened in 2017. The present DeFi and NFT projects are offering real and pragmatic solutions.
In my opinion, the DeFi projects and the DEXs will really change the market. The trade will change and the role of the centralized exchanges will diminish, which will be the most important step towards actual decentralization. As far as the centralized exchanges are controlling the markets we cannot talk about the decentralized market. Of course, the mining of Bitcoin is also not exactly decentralized, regarding the influence of the Chinese miners, but this is another question which worth a whole other article.
It is a lot more important for me that we are already heading toward tokenization where it is not possible to create a project within 5 minutes and it is not possible to get millions of dollars from naive investors with all sorts of meaningless promises. For a functioning DeFi project, you need a team and not only for the marketing side. For an NFT project, it is even more important. It is no longer the time when you created an ERC20 token by a YouTube video. For a well-functioning NFT project, you need a lot more.
I see the future in NFT. I think that NFT shall greatly change the cryptomarket and the attitude towards crypto. NFT is about practical utilization affront of the speculative utilization of DeFi. My opinion is that those projects that start to participate in the NFT market building in time will create such a value that will enhance the use of the blockchain technology in countless industries.