Opinion by: Ken Alabi
Every four years, like clockwork (or perhaps a particularly stubborn rooster), the blockchain ecosystem finds itself under the magnifying glass of public scrutiny. This delightful period, which lasts longer than a cat’s nap, is driven by the age-old economic principle: when you reduce the supply of something while demand remains as steady as a rock, its value tends to rise. Historically, this supply shock has sent Bitcoin‘s value soaring, much to the delight of users, developers, investors, and policymakers alike, who all seem to have a vested interest in the matter.
During these post-halving extravaganzas, the blockchain industry parades its projects, technological innovations, and potential utilities like a peacock showing off its feathers. Yet, despite the fanfare, none of the previous cycles have produced a blockchain application that could outshine existing technologies in any specific area. Still, the core strengths of blockchain—immutability, data transparency, and user asset sovereignty (thanks to private key encryption)—continue to attract innovators like moths to a flame. These features have been creatively applied across various sectors, including borderless payment systems, DeFi, NFTs, gaming systems with recorded in-game assets, fan and loyalty tokens, transparent grants, and agricultural subsidies. Quite the buffet, isn’t it?
While past cycles have highlighted blockchain’s potential, the next period promises to audition new use cases, as detailed below. Grab your popcorn! 🍿
Lessons from Past Halving Cycles
The 2012 post-halving period was a revelation, showcasing the potential for non-mediated, borderless payment systems. Before Bitcoin, the world of payments was as slow as a snail on a leisurely stroll—international transfers took days, and check clearances were equally sluggish. Bitcoin hinted at a future of seamless payments, and early adopters eagerly tracked the number of businesses accepting Bitcoin. However, scalability issues and rising transaction costs put a damper on the festivities. Ironically, many blockchain networks shot themselves in the foot with fee structures that stifled growth. This cycle ended with security breaches, notably the infamous Mt. Gox hack, which was about as welcome as a skunk at a garden party.
The 2016 cycle introduced a veritable explosion of initial coin offerings (ICOs), democratizing access to venture funding. Ordinary folks could now invest in early-stage projects—an opportunity once reserved for the financial elite. However, the market was flooded with tokens backed by little more than a dream and a white paper. The lack of investor protection led to the rapid collapse of many ICOs, leaving most projects from that era as obsolete as a floppy disk.
In 2020, three significant trends dominated the scene: DeFi schemes, NFTs, and play-to-earn (P2E) games. DeFi projects promised yields that were more sustainable than a chocolate teapot—sometimes exceeding 100%—by minting more tokens without any backing economic activity. NFTs saw valuations that could make a grown man weep, some for mere pixel art that couldn’t hold value. The metaverse hype fizzled out faster than a soda left open overnight, and P2E games relied on inflationary tokenomics that collapsed when growth stalled, exposing the fragility of these models like a poorly constructed house of cards.
The 2024 post-halving cycle began on solid footing with the approval of US-based Bitcoin ETFs, formally integrating cryptocurrency into traditional financial markets. This move, paired with blockchain communities increasingly influencing democratic processes, marked a significant shift. For the first time, crypto assets are within financial systems rather than outside, potentially leading to balanced regulation instead of the usual blanket hostility toward the technology. The people have spoken, and they seem to see its utility. The US is poised to take a leading role in adopting blockchain technology, which is as promising as a cat finding a sunny spot to nap in. The next question: How far will this integration go? Could we see more countries adding crypto assets to national reserves beyond the one or two that already have them? Beyond regulatory progress, several blockchain applications are poised for scrutiny this cycle.
Decentralized Real-World Assets
Tokenizing real-world assets and decentralizing their financing have gained traction faster than a rabbit on a sugar rush. RWAs allow asset owners to directly benefit from blockchain-based financing. Key sectors include real estate and home financing, stocks, bonds, Treasury bills, agricultural funding, DePIN, and DePUT. Quite the smorgasbord!
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2025-02-22 18:17