When cryptocurrencies became quite successful in 2017 and early 2018, everybody started to think that crypto would revolutionize the financial industry. Many government institutions and even worldwide organizations like the EU have begun talking about how to implement the blockchain technology to some of their departments.
There were talks like how blockchain technology can benefit the supply chain or how the blockchain technology can help the refugees. However, as time goes by, it looks like the same people keep ignoring the point of cryptocurrencies and their roles in maintaining public blockchain networks.
Take an example: China. The Chinese government has been very supportive of the blockchain technology, but they keep demonizing cryptocurrencies. Recently, this movement is called “Blockchain, not Bitcoin” which means that they support the idea of using blockchain technology, but they want to ignore the use case of cryptocurrencies completely.
What’s even worse is that they would utilize the blockchain for their own version of a centralized coin, which is often known as Central Bank Digital Currency (CBDC) in the crypto community. Imagine that. They are using a decentralized technology to create a centralized coin without real fiat backing it. That sounds like the antithesis of crypto. That being said, there’s always a crypto adoption potential behind every antithesis story. I will explain later.
How It All Began
You might be wondering, when did they start accepting blockchain? Well, different governments started exploring crypto at different times, but they all started to “review” more about crypto after the crazy altseason in Q4 2017 to January 2018. The idea of issuing CBDC (Central Bank Digital Currency) became much more common since then, even though the implementation has been very slow.
The European Union, the Federal Reserve in the US, and the People’s Bank of China, all have agreed that there might be a very positive implementation of the blockchain in some sectors. However, they all seemed to agree that blockchain technology can be surely implemented without the utilization of public cryptocurrencies. The only crypto they might consider is just their own version of stablecoin (which is often worse, because they don’t need to back each token with a paper bill).
Why Blockchain Needs Crypto
The term “Blockchain, not Bitcoin” also refers to the movement of implementing blockchain technology without any cryptocurrency. This power move shows that the governments and big corporations are not close-minded when it comes to adopting technology, but they want to stomp anything that can threaten their currency’s existence.
The problem is, a blockchain is not really a blockchain without enough level of decentralization. For example, private blockchain networks might have 10-20 different entities controlling the nodes, but this is still a very centralized business model. Decentralization matters because you have verifiable truth, considering you have thousands of people (who don’t know each other) giving you the same information.
With a private blockchain, they are all close entities, and there are few nodes at the same time. This opens up to an opportunity that someone can easily influence the other entities in the same blockchain network.
To achieve a much better level of decentralization, you will always need a public blockchain solution. The only way to achieve the true potential of decentralization is by letting average individuals participate in it and not “close friends” among big corporations and government institutions.
And yes, you always need cryptocurrencies if you want to incentivize the public. Just like in the real world where nobody will work for free, you can also say the same thing about average joes supporting the blockchain network. They won’t share their computing power for free, and the most effective way to incentivize them is to have a native cryptocurrency in the same blockchain network.
The Positive Side Of The Movement
However, there’s still a positive side of the “Blockchain, not Bitcoin” movement. Their intention might be the exact opposite of the pro-crypto community, but at least they would still allow non-crypto people to be exposed to the world of DLT (distributed ledger technology).
The idea of Chinese or European CBDC’s is actually not that bad. When people are exposed to use digital currency in the crypto-like environment, it’s quite possible that they would eventually adopt crypto trading. What we are experiencing right now is like the intranet VS internet, all over again.
Private blockchain solutions might be the best option for big corporations and governments, but sooner or later, people would want to adopt the true potential of decentralization, which is the public blockchain solutions. And, as usual, public blockchain solutions need to incentivize the participants by using cryptocurrencies.