Don’t be naive — BlackRock's ETF won't be bullish for Bitcoin
Are regulators trying to disarm crypto-native companies in order to pave the way for Blackrock to steamroll the industry?
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Autor Cointelegraph By Ben Caselin
The meaningful shift from Bitcoin maximalism to Bitcoin realism
There was a time when all cryptocurrencies traded against Bitcoin (BTC). Speculators ventured into other coins when they saw assuring tokenomics or promising hype, but Bitcoin was their settlement coin of choice.Things have changed. Stablecoins now constitute a critical $150 billion pillar in the cryptocurrency market. Perpetual futures over-amplify market sentiment and, more often than not, dominate price action. Much more capital, including from institutional funds, has come into the market lately with only a moderate impact on Bitcoin’s price. So, some former bulls now dismiss Bitcoin as boring.Is this the end of Bitcoin maximalism? Probably not. But, perhaps, it’s time for more realism.Related: Gold, Bitcoin or DeFi: How can investors hedge against inflation?Bitcoin in a sea of memesJust as Disney’s stock can hold value next to gold, new digital-native names like the nonfungible token (NFT) project Bored Ape Yacht Club (BAYC) can rise next to Bitcoin in the digital asset arena. And, just as investors would be willing to obtain the rights to a nearly century-old Mickey Mouse, the BAYC represents a new approach to brand building. And, it could work.It might not, though. It’s speculative, which is what traders like.ApeCoin’s (APE) volatility is not the same as that seen in Bitcoin today. The apes track brand hype, while Bitcoin now trades against a macroeconomic backdrop. It’s realistic to say that Bitcoin is consolidating as a core holding, not just in the digital asset space but even with some brave institutional investors — who typically shun volatility. Bitcoin is the established base layer in the digital asset market, but will it also be the ultimate reserve asset?In all fairness, it’s not Ripple (XRP), Shiba Inu (SHIB) or Bitcoin Cash (BCH) that we see sovereign wealth funds beginning to hold. No serious retirement funds are picking them up either. Realists see that because Bitcoin has proven itself to be resilient throughout multiple crises and because it is truly decentralized and beyond the reach of any single government’s control, it is different from its contenders.We can see that in the “payments” sector, Bitcoin’s dominance with a $750 billion market capitalization is obvious as it dwarfs the next in line. At the same time, however, we cannot dismiss the rise of other “cryptocurrencies” against Bitcoin as futile simply because they are not Bitcoin. Realism opens up the conversation and more understanding, which is ultimately the key driver of adoption.Bitcoin for boomersFrom a price perspective, Bitcoin is only boring for those who crave the roller coaster rush of speculative trading. As that interest looks elsewhere, Bitcoin is growing up and that in itself can unlock more growth.While YouTube influencers race from farming and breeding to staking and minting, haven’t we also seen the conversation about Bitcoin become so much more mature and focused on first principles?No, we didn’t get to see a $100,000 Bitcoin in 2021. But, then, do we really need to be that greedy when we haven’t even reached 5% global adoption yet? Yes, in a less boring world, Bitcoin can benefit from human greed and speculation — as with all investments — but those same impulses can send any asset value plummeting.Related: Boom or bust? Is there a way for Bitcoin price to hit $100K in 2022?Bitcoin takes timeA Bitcoin maximalist typically wants to own enough Bitcoin to do well for themselves across time and space. They probably also want to see a fair and more just economy — hence their support for Bitcoin in the first place. A maximalist should also agree that it’s better to see billions of people holding a little Bitcoin than a few million holding all of it.Indeed, buy-the-dip moments aren’t just useful for those most committed to Bitcoin, but they also help with further distribution as new entrants are attracted to the buying opportunity. That’s a good thing.In this respect, it’s helpful to ask yourself how much Bitcoin you think you should own or aim for. And then act accordingly.Most staunch Bitcoiners, including Michael Saylor, took time — maybe years — to come to their inspiring views. Famed financier Ray Dalio is still evolving. Most politicians barely understand Bitcoin and I have to assume there are even times when El Salvador’s President Nayib Bukele, who made Bitcoin legal tender in his country, stares at the charts and feels nervous.Related: El Salvador’s Bitcoin Law: Understanding alternatives to government interventionAnyone coming into the crypto space for the first time because a funny dog or pixelated primate presented itself as a hyper-sound asset is going to need time as well — A lot of it. But, the end result isn’t necessarily Bitcoin maximalism.Being a core holding, though, most participants in the space have some exposure to Bitcoin already. Just looking at the game theory playing out across emerging markets and in the context of the current sanctions regime, as well as inflation, most investors in digital assets know it’s good to hold “some Bitcoin.”Too toxic?Some say Bitcoin maximalists are toxic. But, people are toxic everywhere. And, what maximalists in Bitcoin do a good job of is reiterating first principles, which helps anchor the conversation. Their motto is, Bitcoin doesn’t need you, you need Bitcoin. True? Well, true or not, the point is: Don’t put your life savings in a memecoin because the community is so nice to you.Let’s be real. The world is dealing with currency debasements, Bitcoin mining can and does serve environmental goals, the United States and its allies did freeze Russian foreign reserves, the future is profoundly digital, inflation is not transitory and holding Bitcoin in the context of any of these makes complete sense.Bear markets show what projects and protocols are really made of. Axie Infinity’s Smooth Love Potion (SLP) token currently trades around 40-times lower than its all-time high. Bitcoin is at about 2-times lower than its all-time high. Breaching $69,000 sooner rather than later would not be unreasonable or even out of the ordinary.Finally, banks “getting into Bitcoin” is somewhat of an oxymoron and some might argue Bitcoin needs none of that, but it’s equally realistic to say that Bitcoin’s integration with global finance and existing infrastructure makes the asset more resilient, as it brings in more stakeholders who will be invested long term.No one needs to be a Bitcoin maximalist, but everyone should be a realist.This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.Ben Caselin is the head of research and strategy at AAX, the crypto exchange to be powered by London Stock Exchange Group’s LSEG Technology. With a background in creative arts, social research and fintech, Ben develops insights into Bitcoin and decentralized finance and provides strategic direction at AAX. He is also a working member of Global Digital Finance (GDF), a leading industry body dedicated to driving the acceleration and adoption of digital finance forward.
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More playing and less earning will make better Metaverse games
If you’re not keen on joining Mark Zuckerberg in the Metaverse, I have bad news for you: You’re already there. You don’t need a virtual reality headset to enter a virtual world. Humans have been representing reality since our distant ancestors first painted on cave walls. If TV, radio, books or newspapers have ever given you access to events that you did not physically attend, you have experienced a kind of metaverse already. Sport and games are another reality that we often partake in virtually — in the stands or behind a screen — when not on the field.So, it’s no coincidence then that, thus far, games dominate what most people understand as the Metaverse, or more widely, Web3. Our innate love of play, our understanding that fulfilling games depend on rules and structures and our willingness to ascribe value to events that unfold in them are integral to our cultures — from soccer to chess to Roblox. They’re also an important part of the economy: The global sports market reached nearly $400 billion in 2020, even after pandemic lockdowns and market estimates for video gaming to reach $178 billion annually.Therefore, it’s entirely natural that games are likely to lead the journey into more immersive and interconnected metaverses. It’s also likely that games will continue to deliver financial value to consumers, companies and countries in their meta-realities. Microsoft’s recent bid to purchase Activision Blizzard in an all-cash deal certainly underscores this point. How such major online game franchises will integrate into a Web3 metaverse is yet to be seen but blockchain-based games that have risen to prominence so far such as Axie Infinity, Decentraland and Alien Worlds. These games have pioneered a play-to-earn (P2E) model that gives insight into that future. Leveraging nonfungible tokens (NFTs) and in-game digital currencies enable players to generate assets in these games, trade them in token form and transfer out value into real-world currencies through crypto exchanges. A compelling development for gamers and non-gamers alike is that instead of brand owners (Facebook/Meta, Microsoft, et al) extracting all the value from games, players themselves can have a stake in a game’s success. Related: NFTs find true utility with the advent of the Metaverse in 2021Stories already began emerging last year of communities in the Philippines earning income from playing Axie, attracting so much attention that government officials suggested play-to-earn income should be subject to taxes. This phenomenon offers a glimpse of how an emerging crypto-economy could create financial inclusion opportunities. But, the rise and fall of one of Axie’s in-game currencies reveal the inherent challenges in developing sustainable economic models for games, as well as a practical reality that for metaverse games to succeed: They should be more about playing than earning.It’s not the tokenomyAs an example, Axie Infinity is a game involving digital pets called Axies. When players contribute to the game’s ecosystem, they earn tokens. But, to get started, they must purchase their first Axie — an NFT that can appreciate in value over play. The game involves two tokens built on the Ethereum blockchain: Axie Infinity Shards (AXS) and the brilliantly-named Smooth Love Potions (SLP). SLP is earned in-game and is required to “breed” new Axies (please don’t ask how).In a game world, a number of factors can contribute to the price performance of a digital asset such as Axies’s SLP. The way a token is distributed, the rules around supply, price-stability mechanisms, how governance is conducted and, of course, the power of expectation from the game audience itself all matter. But, utility may be the most important factor for a token that powers a game. Simply put, does the asset enable the holder to have the experience that they want? That might include aspects of gameplay to community status to earning opportunities. If players perceive value, then they’ll hold on to them or even buy more. Otherwise, as with any asset, people will sell off and invest time and money in something else.In Axie Infinity, the utility of its SLP construct is how it allows players to create new Axie pets, which can make more SLP and create further value for the player. That positive feedback loop drove SLP prices to soar over the summer of 2021, but it has declined by 94% since then. That implies people have placed a higher value on what they can gain from selling SLP than from holding it and “breeding” more Axies. In other words, they have preferred to cash out than continue playing the game.Early daysIt’s important to remember that the play-to-earn concept is still in its infancy. Games like Axie are early experiments in models that combine gameplay with economics. Axie itself introduced SLP as a second in-game currency after it found that a single-token economy had its own problems with liquidity. Experimentation will continue but a key lesson for metaverse game developers is that the fun of playing a game still needs to come first, not the earning.Related: New tribes of the Metaverse — Community-owned economiesThe risk of prioritizing economics over gameplay is simply that it turns players off. Attempts at Sega, Konami and Square Enix to bring NFTs into popular games have encountered user backlash, for example. Over time, however, we can expect increasingly sophisticated and expansive metaverse games will come to offer an incredible range of experiences. Greater choice and richer play will naturally lead to more users finding utility in holding tokens and, therefore, more sustainable game-based economies. As more games and sports become established in the Metaverse, a critical factor will be the quality of the spectacle. We humans need contests, heroes, narratives and wagers. We want to interact as part of an audience having a shared experience, as well as to participate in games ourselves. There’s no reason why games on the Metaverse shouldn’t be as real and exciting to us as the English Premier League, NBA or the Free Fire World Series — 2021’s most-watched esports event.Better gameplay is the stickiness that can make a specific game’s micro-economy more sustainable. What blockchain can add is a level of interoperability to make the macroeconomics of metaverse games, in general, more liquid and fairer than those of big-sport today. Interoperability opens opportunities for players to take digital assets or status out of one game straight into another, or even further out and onto social platforms. That gives players a bigger share of value creation and more power and, therefore, interest — as opposed to the economics and rights associated with game franchises and leagues today where owners and publishers grab all the benefit. You may not be keen to join Mark Zuckerberg in his Metaverse, but on the blockchain, it should be game on for ordinary fans and players to have fun and capture more value for themselves. This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.Ben Caselin is the head of research and strategy at AAX, the crypto exchange to be powered by London Stock Exchange Group’s LSEG Technology. With a background in creative arts, social research and fintech, Ben develops insights into Bitcoin and decentralized finance and provides strategic direction at AAX. He is also a working member of Global Digital Finance (GDF), a leading industry body dedicated to driving the acceleration and adoption of digital finance forward.
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A letter to Zuckerberg: The Metaverse is not what you think it is
Dear Lord Sugar Mountain,Attention: to my Facebook friend who is building a version of the metaverse that nobody wants as a starter.The last few years must certainly not have been easy. Your business model centered around polarization and, subsequently, outrage has ironically unified many of us against relying too much on your social media platform. Your government — whose sniper rifle accuracy you know all too well as they took out your ill-conceived stablecoin project shortly after your expensive global advertising campaign went live — has tuned in to the many whistleblowers exposing how your company captures and sells attention. It has called you in for questioning. Although to be fair, they also needed to speak with you to better understand the basics of digital ad revenue.What do people do when they are cornered? One of two things: fight back or flee the scene. As the walls close in, it seems that you have chosen to flee. Instead of addressing the deep-rooted issues of your business model, you’ve simply renamed the company, borrowing from a cyberpunk term coined in a 1992 dystopian novel that’s all about escaping a decaying world and getting hooked on an alternative illusionary reality, only to completely disregard the shortcomings of the real world. That’s probably not the connotation you had in mind when you rebranded the company, but it is the more accurate version of what you are promising to build. Related: What Facebook’s rebranding tells us about Big Tech’s ‘Game of Platforms’Understanding the Metaverse There is no ultimate definition of the Metaverse yet, but Grayscale’s attempt in their recent report is getting very close. It depicts the Metaverse as a set of interconnected experiential 3D virtual worlds where people located anywhere can socialize in real-time to form a persistent user-owned internet economy spanning the digital and physical worlds. While most of the adjectives in that definition are subject to debate and interpretation, one, in particular, stands out and is perhaps the most aligned with what we’re building in Cryptoland: user-owned. In the metaverse, we are constructing projects like The Sandbox, Decentraland, Axie Infinity, My Neighbour Alice, Star Atlas and Revv Racing. It is the users that ultimately own content as in-game NFT assets. The idea is that everyone has equal access to the means of production, in-game economics and consumption rooted in verifiable ownership of digital assets. What’s more, these in-game assets are transferable, ready to be traded on marketplaces and, at some stage even, to slide between worlds — your racing car skin designed for Revv Racing could be sent to another wallet connected to another racing game, giving your FlameBoi Design another chance to cross the checkered line and take the gold. Yes, one day, our user-owned in-game assets will slither wildly as they slip away across the Metaverse.This vision for the Metaverse has little to do with your corporatized version of a nauseating virtual reality (VR) game of ping-pong with a childhood friend in a different timezone, wearing a disorientating headset that scans everything in the room, only to be fed you the “Recommended Purchases for You” sidebar minutes later. Related: New tribes of the Metaverse — Community-owned economiesBuilding something new You talk about replacing precious real-world social interactions with a digital immersive “experience,” conveniently overlooking that your company will then own everything about that experience — from the visible interactive game elements all the way down to the metadata. Instead, the crypto version of the metaverse is driven by the same motivation as other Web 3.0 projects in this space: rebuilding our digital world to restore ownership to the individual. It has nothing to do with VR or your vision of a “better world.”We’re building a new environment to spend our time and creative energy in. One that is equally accessible, rooted in crypto-economics and, at some stage, perhaps largely run by decentralized autonomous organizations (DAOs). And while corporations are welcome to participate and produce their own assets in the crypto metaverse, they should not own any outsized part of it, as it takes the power away from the individual and from the main goal in question: to create a Metaverse that is user-owned.Centralized dreams have no business snooping around the metaverse. Not going to make it.This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.Ben Caselin is the head of research and strategy at AAX, the crypto exchange to be powered by London Stock Exchange Group’s LSEG Technology. With a background in creative arts, social research and fintech, Ben develops insights into Bitcoin and decentralized finance and provides strategic direction at AAX. He is also a working member of Global Digital Finance (GDF), a leading industry body dedicated to driving the acceleration and adoption of digital finance forward.
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