By Alex Miller, CEO of Hiro
Cryptocurrency adoption has seen lots of ups and downs, but one thing that has stayed consistent is Bitcoin as the number one chain. Institutional interest in the digital asset still remains high, and regardless of current market conditions, more than $15 billion in value is exchanged on Bitcoin’s network on any given day.
Satoshi Nakamoto, the anonymous person or group behind Bitcoin, created it as a response to the 2008 financial crisis. It was a way for people to send money in a way where they didn’t have to rely on centralized systems (banks) to process their transactions. Since then, blockchain technology has grown in a way that no one could have envisioned from Bitcoin’s inception. A great example of how the technology has grown since 2008: non-fungible tokens (NFTs).
The first NFT was minted in 2014, and the technology started to go mainstream in 2017. No one could have expected the technology to blow up the way it did in 2021, garnering billions of dollars in total sales. NFT art gained traction with celebrities including Jimmy Fallon, Justin Bieber and Paris Hilton, to name a few, promoting them on television and social media alike. Alas, the market was severely overvalued. Very few of these NFTs proved their use cases and people weren’t incentivized to hold on to them in the long term.
The NFT market has declined in value in recent months, but NFT technology isn’t going anywhere anytime soon. Non-fungible tokens provide a variety of practical use cases and there is the potential for specific NFTs to provide lasting value to their users forever. But for that to happen, NFTs need to be hosted on a blockchain that lasts.
Developers don’t want to put their projects on a platform that won’t exist in three years. So-called top 10 blockchains can fall off the face of the Earth at the drop of a hat, as the Terra Luna crash earlier this year showed. Blockchains can sometimes show initial promise, but any number of unfortunate circumstances, internal or external, can lead to the downfall of the entire network.
However, Bitcoin has lived through every crypto winter and crash. Bitcoin is the OG cryptocurrency. People who know virtually nothing about cryptocurrency have still at least heard of Bitcoin. When you have holiday dinner with your family, it’s likely that they will have only heard of Bitcoin (and perhaps Dogecoin, due to a certain billionaire). Suffice to say, Bitcoin is the representation of cryptocurrency for the general public.
People trust Bitcoin for its established longevity; the technology is reliable and the network can’t be compromised because too many people are using it or mining on it at any given time. No blockchain has come close to dominating the crypto market like Bitcoin since its inception. These are some of the reasons why Bitcoin is the perfect blockchain for developers to build their NFT projects on.
NFTs will always continue to be used for digital art, but that’s just scratching the surface of the technology’s capabilities. The fundamental concept of a non-fungible token has thousands of potential use cases that go far beyond art. They can be used for asset fractionalization, verifying real-world ownership, medical records and more. These important assets need to exist on a blockchain that has proven its longevity and security—Bitcoin has done that for years. Another benefit of NFTs on Bitcoin: it allows for people to actually spend their BTC rather than treat it as just “digital gold.”
Many people already identify with the Bitcoin brand. For example, there are 150,000+ registered .BTC addresses (and growing) and they’re being used as the backing for people’s digital identities. NFTs on the Bitcoin ecosystem inevitably benefit both sides. People already using the Bitcoin network get access to new digital services powered by NFTs, and proponents of NFTs can take comfort in knowing that their digital assets are safely stored on the Bitcoin network. The combination of the two could change the way people view NFTs and how they use Bitcoin’s blockchain.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.