2021 has been an exciting year for cryptocurrency and blockchain technology. In the cryptocurrency space, Bitcoin and Ethereum had hit their all-time high this year alone, and the effect that cascaded to other altcoins was spurred on by the announcement of Coinbase, one of the world’s first cryptocurrency exchanges going public, a feather in the cap of the mainstream validation of cryptocurrency.

Bitcoin which has been primarily viewed as a store of value is in the spotlight thanks to the meteoric rise in the last few months which has steadily resulted in more believers, and impressive gains for those who hold it. Bitcoin was even been made the main treasury reserve for business intelligence firm, MicroStrategy. The company’s belief in cryptocurrency has led them to use Bitcoin to pay some of their board of directors. This sentiment however hasn’t been shared by the Chairman of the Federal Reserve, Jerome Powell, who saw it as a speculative asset, a substitute for gold but not for fiat. More recently, Warren Buffet and Charlie Munger slammed Bitcoin, sparking a response from Robinhood.

In the space of blockchain technology, March 11 was the day when Beeple’s NFT-based artwork “Everydays: The First 5000 Days” sold for over USD $69.3 million, the eye-watering amount brought NFTs (non-fungible tokens) to the forefront of news cycles. NFTs became the means for people to own art, and with the sale of Twitter CEO, Jack Dorsey’s first Tweet for just under $3 million, a means to own a piece of history. It wasn’t long before other artists such as Snoop Dogg and Lionel Ritchie announced their partnerships with cryptocurrency exchange, Crypto.com, to grab their share of the perceived gold rush.

These milestones though impressive alone, paint a larger picture when put together, and shifts the conversation. Cryptocurrency has shown that it can grow in monetary value, though that status has been contested with views ranging from it being the currency of the future to a gamble ripe for ruin. Many of the big technological improvements that move us forward have been disruptive before they became mainstream. While other blockchain projects with existing use cases have been making steady progress, Beeple’s record transaction has put a bold, viral stamp on the use of blockchain technology and drummed up excitement. 

As discussions for the role of cryptocurrency and blockchain technology in the future open up, here are some of our thoughts on where this might go as it gains greater mainstream momentum and acceptance.

Sentiments, prices, and the impact of the Tweet

In comparison to other assets, cryptocurrency is the new kid on the block, and sentiments have fuelled massive price rallies. In 2018, John MacAfee was reported to have charged $105,000 per promotional cryptocurrency Tweet. Fast forward to 2021, and he’s being charged for securities fraud over a “pump and dump” cryptocurrency scheme, the result of a lawsuit from the Securities and Exchange Commission (SEC).

More prominent than MacAfee with regards to making waves with these prices would be Elon Musk. Doge prices soared to an all-time high, as people wait in bated breath for Elon’s appearance on SNL as a host on 8 May - a good chance for him to drop a cryptic message or two to spark a new frenzy. 

Musk is no stranger to brushes with the law when it comes to his social media activity, with the latest lawsuit from a Tesla investor about Musk’s Tweets. A research paper done by Lennart Ante of the Blockchain Research Lab in Germany set out to measure the price of the cryptocurrencies mentioned by Elon.

The quick rise and fall in prices for the cryptocurrencies in his Tweets reinforces the speculative nature. Possibilities of quick wins will draw those who enter without knowing what they are buying into this space. This volatility could taper and be kept in check as cryptocurrency grows in maturity.

Rise of the shitcoins

There is Bitcoin, there are altcoins, and there are shitcoins. The success of NFTs and the recent spike in cryptocurrency values will more likely than not spawn a host of shitcoins which at the best of times are projects that are ill-conceived, while others could turn out to be quick pump and dump schemes at worst. The crypto space has made huge strides in the last few years with communities that are savvier, better educated, and go through projects with a fine-tooth comb. 

Riding on the NFT craze, the Bitclout blockchain which seeks to tokenise celebrities and profiles has run afoul with legal issues by doing so without the permission of profiles. Singapore Prime Minister, Lee Hsien Loong, as well as Singapore’s national carrier, Singapore Airlines (SIA) were listed on Bitclout without their permission. Despite having legitimate investors such as Sequoia Capital, Social Capital, and Coinbase. Bitclout’s anonymous founders and the lack of means to cash out have red-flagged this project for many.

With more money circulating in cryptocurrency, so too will the prevalence and sophistication of the scams involved.

Blockchain utility in the real world

That being said, there are real-world applications for blockchain from banking, medtech, to how we consume our entertainment, companies are looking to implement blockchain technology to solve specific problems and have been making the right steps in that direction to improve 58 industries and counting.

Projects like VeChain have partnered up with global companies such as DB Schenker, PWC, and BMW to introduce greater levels of transparency and efficiency to their supply chains. Other projects such as Algorand have been serving as the blockchain foundation for many other companies across different industries. 

Blockchain and other related cryptocurrency terms will be the buzzwords for the next few seasons. Blockchain technology seems to be the sexy, catch-all solution for any industry challenge that hasn’t be solved yet, but the mileage varies from vapourware to projects that are actually substantiated, and that is something investors and consumers have to watch out for.

NFTs have a little something for everybody

We believe that the possibilities and different avenues it offers to different parties have contributed to the hype surrounding NFTs.

For artists, the opportunity to get in on what looks like a trend (or bubble) for better exposure and commercial gains has flooded the space with many offerings across different media. Musicians have latched onto the movement to make up for lost revenue due to COVID-19 restricting touring, and to bring balance back from the lopsided deals they get from streaming platforms. Beeple’s sale set the bar high, and the ripple effects have been felt by artists such as Blake Jamieson who made $46,000 in 6 weeks through NFTs.

For buyers, the recent spike in NFT-based collectibles makes the art-collecting scene much more inclusive and becomes a viable start for those who want in. Along with the growing supply of NFT-based art come price ranges that make it even more accessible. This interest has also pushed for the development of fractionalised NFTs that give more liquidity for owners of NFTs to offer fractional ownership of pieces to other interested parties. All these give buyers a latitude between ownership and investment into art powered by blockchain technology that will only get more nuanced as time goes by.

With multiple parties having the means to participate and have a stake in NFTs, the discussions around the topic will be exciting to uncover. Events such as the PodFest Asia - NFT Live! Festival headed by Wayne Cheong gives a platform for these meaningful conversations and will be instrumental in shedding the right light about the space.

Beyond support and appreciation for the arts, art collecting has tangible benefits. This latitude would give more options for tax rebates while opening the doors to new social circles through the generous donation of their NFT-based art to galleries or societies. However, with NFT-based art growing in relevance, the propagation and spread of contemporary art could make the art scene more vibrant, and with this added avenue, make being an artist a cool, and financially rewarding career in time come. 

What next?

Though we believe that the NFT craze right now is a bubble that has set the bar unsustainably high, it will bring the conversation for the role that blockchain technology will play in our lives and engage both supporters, and detractors.

At this point, regulators have been trying to clearly define what cryptocurrencies can represent - currency or security? Cryptocurrencies that blur the lines have been kept in check by the SEC. Kik Interactive settled the lawsuit it had with the SEC for $5 million due to a violation of the Securities Act in October of 2020. Right now it is embroiled in another lawsuit against Ripple. In Singapore, Senior Minister Tharman Shanmugaratnam who is also chairman of the Monetary Authority of Singapore (MAS), has mentioned that cryptocurrencies are highly risky, and “not suitable for retail investors”. 

All eyes are on Doge right now. The euphoric mood of those who got in early, the FOMO making others liquidate positions in sensible projects, and those who are putting in more than what they can afford is creating a perfect storm that could be a rude awakening for many. Cardano’s founder, Charles Hoskinson had stated that the Doge bubble though profitable for some now, would be consequential for the space in the long run.

This gives ammo and credence to the cautious stance taken by regulators and the powers that be is an obstacle for companies and organisations to confidently adopt blockchain solutions. As the space grows in maturity, we could see volatility in mainstream coins lessen considerably, and punters who wish to place their money on projects that experience the growth that we have seen in recent months will have to venture to the fringes. 

We hope that as more use cases for blockchain technology get developed, the criteria and processes will get refined, along with investors who know more about the technology and the limitations. When the time comes that all parties can come to a consensus, we can leave the fork behind, move as a collective and create a new block that makes sense and is beneficial for all. 

That will truly be much wow.