1 October 2020
The success of any public project depends on participation. If online, there must be developers, but the world of blockchain and crypto moves fast and “old” code quickly expires. Projects which first came out with Bitcoin fizzled out. Some were scams while others fell out because of lack of developers and community.
For cryptocurrency and Bitcoin, this matters. Bitcoin is this giant because of its founder’s vision. Besides, there is the user’s excitement in using a platform that is “freeing”. No more brokers, taxes on profits—at least then, and the ability to send funds.
Bitcoin, without a doubt, is a product of use. Primary marketing during a world crisis in 2008, guided the Bitcoin to what it is now. Developers were its engine, and users—even those who bought pot using Bitcoin, were the fuel who pushed crypto to the limelight. Sensing opportunity, a modern-day BTC billionaire and a vocal supporter of cryptocurrencies, Tim Draper, bought a ton which a few years later made him a fortune.
Critics say Bitcoin now finds itself in 2014. Bitcoin “isn’t fun anymore” some complain. Aside from discussions on security, use, and others, the “Bitcoin” topic is quite boring. The last time Bitcoin improved its software was in 2017. Since then, it has failed to change. The Lightning Network (LN)—a proposal to reduce processing time and high fees in Bitcoin, is a failure according to Roger Ver—a former Bitcoin supporter-tuned critic.
The problem is that Roger compares the amount of Bitcoin in Ethereum. BTC in Ethereum is, unfortunately, used not only for payments but for investment through DeFi. Even so, the DeFi scene continues to command attention and draw demand to Ethereum. The result is high transaction fees.
But there was hope in Bitcoin.
The Lightning Network is still an experiment. Used mainly for payment, the LN is on top of Bitcoin enabling buyers and sellers to connect and settle in seconds. Limitless number of channels can also be created. This helps in driving the use of Bitcoin and this has an effect on price, a factor that’s widely tracked by speculators, investors, and ordinary observers of the crypto markets.
Since the Lightning Network is experimental–(and centralized—different from Bitcoin’s principles), and the crypto community is rapidly maturing, the Bitcoin community is demanding for more to keep up with changing times. Not only do they want more features like privacy added to Bitcoin, but they want a lasting scaling solution that won’t destabilize the network while driving use.
As seen, one pressing need is to use Bitcoin more and not just store them. Rarely do Bitcoin owners spend their bags. Instead, they hold them meaning the coin is now more of a store of value than a medium of exchange though it can rightly perform both of these functions. As Michael Saylor lays it out: Bitcoin is digital gold that will “grow harder, smarter, faster, & stronger due to the relentless progression of technology.”
The question from now on is whether Bitcoin will be like a store of value like gold or be used as money according to the founder’s intention. However, what Bitcoin becomes mainly depends on its price. Whether it will rise or fall a few weeks before the U.S. presidential election remains to be seen. At the moment, blockchain data shows there is demand.
A leading analyst says “new money is flowing” and this is yet to be reflected on the Bitcoin price chart. From chart analysis, when participation is high but prices are not moving, the likelihood of prices rising is high. Complementing the analyst’s comment is the observation from the head of an analytic firm, Glass Node. Its CEO recently said more traders think the BTC is under-valued at spot rates and are positioning their orders, preparing for a potential rally.
From the BTC/USD daily chart, there are hints of buy pressure though sellers are in control.
First, participation levels—that is, trading volumes, is average despite strong supporting news. Second, the BTC/USD price is wavy, moving inside the Sep 21 trade range. This is hints of sellers unless there is a sharp close above $11,500 with increasing trading volumes preferably exceeding those of Sep 3.
Losses below $10,000 will nullify this project and open doors for sellers aiming for the jugular at $8,500—or worse. If Bitcoin rises above $11,500, will the scene be duller, and marked with holders ready to tokenize their BTC and shift to DeFi? Only time will tell.