If you have been in the crypto industry for a while, you might have noticed that many governments and mainstream analysts are praising blockchain technology while being hostile to cryptocurrencies at the same time. This is often regarded as the “Blockchain, not Bitcoin” narrative. Basically, their idea of blockchain is that the technology is great, but only if it is used without the native cryptocurrency attached to it.
Their argument? Because they think cryptocurrencies are speculative assets without real assets backing them. They are being used by speculators and gamblers. While they have some decent points in their anti-Bitcoin argument, many of these points are easily counter-able.
Blockchain Tech Is Great
Let’s start with the common agreement. Everybody knows and agrees that blockchain tech is great. Even those who keep belittling Bitcoin and other public cryptocurrencies usually admit the prowess and importance of blockchain technology. That’s why they might not believe in Bitcoin but they believe that decentralization can be quite helpful to help them maintain CBDCs (Central Bank Digital Currencies) and other important advancements in our currency world.
Everybody understands that the public does not really trust certain entities in the government. Everybody also understands that the centralization of power usually tends to corrupt. The use case of decentralization is to mitigate these risks and to create a much more trustworthy environment by removing the “trust factor” itself. All the world’s superpowers recognize the importance of blockchain technology. But there’s one thing that the “blockchain, not bitcoin” brigade miss, which we will explain shortly.
The Failure Of Financial Industry
The biggest point of Bitcoin is not the blockchain technology but the political belief that the traditional financial industry has failed us. If you look at Satoshi Nakamoto and the earliest Bitcoin adopters, they always tried to teach other users that Bitcoin was a better alternative compared to fiat currencies. Nakamoto even once said that the problem of fiat currencies is that you have to trust them but the history of these currencies have been full of breaches of trust.
The idea of Bitcoin and other public cryptocurrencies is that you don’t have to trust the issuer. Everybody can have the same copy of the blockchain, and there’s no one single party that can easily create a new money supply at will. This is very different from fiat currencies, where they can just keep printing and creating new debt out of thin air.
The main goal of Bitcoin is to eliminate this abuse of power. The main point of crypto is to highlight this financial problem for the politicians to eventually listen and adopt a similar approach. To mitigate all the possible risks that can happen by overheating the printing machine of central banks.
However, as expected, these central banks and governments don’t listen. They don’t want the power to be decentralized from them. That’s why they try to separate the use case of blockchain technology from the true point of why cryptocurrencies exist.
Internet vs. Intranet All Over Again
So, what does it mean? Does it mean that the governments are going to adopt blockchain technology to support digital fiat and ban traditional cryptocurrencies? I don’t believe so. While some shortsighted regulators might do that but I believe this is the case of internet vs intranet all over again. Yes, central banks might adopt blockchain technology and turn it into semi-private or even fully private blockchain ecosystem to support their digital fiat currencies. However, this is a very limited blockchain ecosystem and might need some type of a proxy to connect to the real blockchain ecosystems like those in Ethereum, Polkadot, Cosmos, or even Bitcoin blockchain.
Meanwhile, the legitimization of blockchain tech by central banks might indirectly benefit the crypto ecosystem. The fact that crypto purchase has been legalized in many states has said it all. Recently even Paypal has announced that it will start accepting BTC, BCH, LTC, and ETH into its applications (including the nationwide popular Venmo).
So, at the end of the day, the fact that central governments hate crypto but welcome blockchain might still benefit the traditional and public cryptocurrencies. It’s like when you are exposed to a computer the first time but you never know how to use Mac Os X or Windows; you will be there eventually.