In order for crypto to be a usable currency in the real world for retail commerce, it needs to be fast, cheap and handle many tens of thousands of transactions per second just like Visa and Mastercard do. But in order to be a respected and viable currency and maintain guaranteed value, it must also be decentralized to prevent privileged entities from creating it at will, like the people at the US Federal Reserve Bank do with the US dollar. In the crypto world, both of those needs have been solved. The decentralized need was, unsurprisingly, solved with the creation of bitcoin in 2009 as it was directly inspired by the abuses enacted in response to the 2008 financial crisis. The fast transaction speed and high volume & low cost issue solved within the last few years with other crypto tokens like EOS and Hetera Hashgraph (HBAR, which uses a new tech that is not even blockchain tech). But no single crypto coin has really carried both solutions at the same time. Some coins, namely the free-market minable currencies can’t really complete transactions quickly, and the “proof-of-stake” coins, usually referred to as tokens which are not mined, have solved the speed & volume issue largely by undermining, to various degrees, the decentralized nature of the minable cyrptos. The technical problem is that the decentralization of mineable crypto is a headache in reaching near instant consensus globally which is required for transaction completion. Data about newly mined bitcoin must be broadcast in a competitive fashion across the global network and that takes time, generally up to 1 hour, which is unacceptable for retail, point-of-sale use of crypto like at a grocery store checkout counter. By making tokens centralized to some degree, transaction speeds & volume can be boosted enormously, but at the significant cost of losing the important safety decentralization advantage.
But in order for a crypto to be usable as a true currency solution in the real world, it needs both qualities, but technically speaking, Bitcoin is a very archaic coin limited to a pathetic 7 transactions per second and because of transaction volume limitations, costs at this time $20-$30 to transfer from one wallet to anther. Truly it’s a covered wagon compared to more modern cryptos which are more like 18-wheelers.
But one exciting solution we now have is put forward by a new token called “Wrapped Bitcoin” with the trading name of WBTC. While this token may or may not actually be a full real world currency solution, it certainly lights the way, at the very least.
WBTC is a token created and backed by bitcoin on a 1:1 basis. That is, every WBTC token is worth the same as 1 bitcoin and always will be because they can be redeemed for bitcoin on a 1:1 basis. WBTC tokens are created by depositing bitcoin into the network where it stays put but can be viewed publicly by anyone, anytime 24/7/365. The WBTC tokens, because they are not burdened with the same global consensus needs as bitcoin, can then be transacted between people and businesses at potentially high speeds and tiny costs that are impossible with bitcoin itself.
In effect, bitcoin becomes the gold and silver counterpart of the days of old, and the network it is deposited into becomes a fully automated digital bank. Because it’s a free-market decentralized minable crytpo, we know it’s supply is very limited and can’t be counterfeited, just as gold and sliver can’t be physically counterfeited. WBTC tokens then are fully backed by bitcoin, but unlike paper money that was backed by gold and silver, the whole world, public and private can verify on a continuing basis that no fraudulent WBTC tokens have been created or put into circulation.
And just like that, we have the makings of a crypto that is: Decentralized in creation, guaranteeing no central entity can abusively create more at will, AND we have the power to exchange it’s value in massive volumes as fast as Visa and Mastercard and to do so for fractions of a penny per transaction which is far more cheaply than even Visa and Mastercard are capable. We get a complete crypto solution for a currency that is guaranteed to be both sound and completely usable in all forms of commerce, point of sale or otherwise.
This solution basically takes the “covered wagon” crypto called bitcoin, and puts it on an 18- wheeler, solving all the problems that are inherent with covered wagons, and that certainly brightens my outlook for bitcoin potentially holding it’s crown in the crypto world. By itself it can’t do that, but it can get an assist from another crypto and together they can compete with the best of them.
Now WBTC operates on the Ethereum blockchain, and whether it’s the best vehicle for this complete crypto solution in the form of WBTC remains to be seen. It may not be. Transactions in Ethereum itself are also too expensive at this time and that cost issue may also exist with WBTC. What may work better is a similar bitcoin backing set up by a tokenized, proof- of-stake crypto that already does have enormous capacity and low cost issues fully resolved. EOS and HBAR both claim to have achieved that goal.
Without a doubt, this model of linking together a free-market minable crypto like bitcoin to a “proof-of-stake” tokenized crypto can guarantee a 24/7 publicly auditible backing to bitcoin and yet carry the full service value of speed, volume and transaction cost. In so doing, it gives us a complete solution for a crypto currency that requires no local banks and no central banks and eliminates all central control of currency. This is the future, and marks, for the first time, a clear path from the darker forest of the crypto world that has struggled to find both purpose and utility, to the outside world where crypto can function fully as a usable currency in every way. There may be other paths, but this is one certified way crypto can now compete in every way with fiat currencies that now dominate the world.
And being counterfeit-proof, crypto can solve a great many of the world economic ills. People usually don’t understand how such problems can be tied to fiat money and banking, but that’s part of the reason it happens, and crypto has the ability to remake the whole world for the better.