Proof-of-Stake Makes Their Move: Is Bitcoin In Trouble?This might be somewhat of a controversial take, but for a while I've been warning that Bitcoin's long-term prospects may be in trouble - a lot of it has to do with how the coin's community distanced itself from utility and business cases and leaned hard into the "store of value" idea during last year's hype.
- The idea of "store of value" applies to all money and is not really a competitive advantage: all coins store value by default.
- Bitcoin's block size limitation and efforts to make improvements on the protocol have largely been thwarted by the mining community who prefers the scarcity model and don't want things to change.
- Bitcoin failed to rise in response to inflation like gold did: the "Bitcoin is good for inflation" thesis did not pan out in the last few rallies for alternative assets.
- Bitcoin's recent attempts at defending their interests through the political system (Brad Sherman vs Aarika Rhodes, El Salvador) isn't getting the results that many of its supporters hoped for. And more people are starting to realize that its governance processes and scaling solutions are done off-chain - which clashes with the idea that the coin is completely decentralized.
- Despite its attempt at differentiation, the data suggests that people buying stocks and people buying Bitcoin are often overlapped heavily, ever since it became much easier to acquire crypto assets through mainstream sources. Bitcoin's name-recognition may end up hurting them in the long-run since it's likely to go down with the fiat market as a whole.
As inflation remains high (a record 8.6% in May in the US), the financial industry is starting to talk more about interest rates - during recessionary times people tend to favor reliable interest returns rather than speculation plays. As a result of this we see that crypto coins that offer staking rewards (Tezos - XTZ, Algorand - ALGO, Cardano - ADA; soon to be Ethereum - ETH and Chainlink - LINK) are starting to gain some momentum.
Given that the banks have been hesitant to raise interest rates on their savings mechanisms (though they don't seem to have any problems raising interest rates on your mortgages/loans lol) the value that proof-of-stake coins offer in DeFi have started to look much more appealing. If these trends continue, the "flippening" may be sooner than we thought. (But not in the way that most thought it would go down - it may not even be Ethereum, if the merge doesn't go as planned over this summer.)
