There’s no denying that the last two years have been a test of resolve even for crypto enthusiasts.
Objectively, good things have been happening even during the industry's grimmest times. Builders have continued developing throughout the bear market and crypto enthusiasts continue to be highly motivated. But the general public isn’t so sure. An April survey from Pew Research Center found that roughly 75 percent of those familiar with crypto aren’t confident that the current ways to invest in, trade or use it are reliable and safe. This, along with an uncertain global economic outlook, has created much of the ongoing anxiety that we see today.
When Satoshi Nakamoto created Bitcoin in 2008, it was against a backdrop that was, in some key ways, similar to what we’re witnessing. Only now, Satoshi’s own creation has also been wrapped up in global economic forces that have caused significant hesitation and doubt. How do we combat this? What will it take to reverse these trends and advance the goals of democratization and decentralization that sit at the core of Bitcoin and crypto?
But most of all, how can the Bitcoin community – and the Bitcoin ethos – lead the crypto community in building a bigger, brighter future for the industry?
In this Trust Machines piece, we’ll talk about the current state of Bitcoin (and crypto at large), what brought us here and what needs to happen to ensure that Bitcoin gets back on track for widespread adoption.
How Did We Get To ‘Crypto Winter’?
In order to assess the likelihood of getting that momentum back, first you need to ask what went wrong. Some of it was bad luck, some of it was bad press and some of it can be blamed on the normal cycle of market movements.
To be clear, these factors aren't inherently problematic, but they can impact public sentiment and scare away potential users, many of whom are curious and want to know more about the potential of crypto and blockchain. This is particularly true for those with less technical knowledge about the DeFi space or understanding of its benefits given how prominently market narratives are emphasized as markers of success.
The biggest blows for crypto, after all, were a series of negative headlines in 2022 that shook the foundations of the industry and fueled a slump across the board. For the average person who was not as familiar with the technology or many of the ecosystems that exist in the crypto sphere, these headlines seemed daunting.
So How Do We Rebuild? Building Back on Bitcoin
But truly, it’s not all bad news out there. The recent bitcoin rally was driven in part by optimism over the prospect that a spot Bitcoin exchange-traded fund will soon be launched, according to Barron’s, and a strong builder culture that has persisted even during this bear market. This demonstrates the rapid speed at which crypto’s fortunes can turn around, aided by the fact that a strong builder culture can lay the foundations for the road ahead.
Crypto adherents can also help the process along by addressing some of the biggest roadblocks that are holding the industry back. Fortunately, the Bitcoin ecosystem is already full of examples of how these challenges can be addressed.
Builders Keep Building
While token values rebounding to 2021 levels would undoubtedly make people happy, it is, mostly importantly, not just about the money. For many crypto enthusiasts, the strongest barometer of success would actually involve mass adoption of the trustless technologies and decentralization introduced with Bitcoin’s creation. But how to achieve this?
There are some obvious answers – one of which is when there are more available use cases. While many builders kept going throughout the bear market, there are still a large number of crypto assets whose potential is currently untapped. Bitcoin is one of them. Despite being the oldest cryptocurrency, it is still seen by many as a store of value rather than an asset that can be employed, largely because of its design. By prioritizing security and decentralization, Bitcoin has faced scalability issues since its inception, which has largely contributed to the narrative that its use is limited.
But in the last few years, the advent of Bitcoin layers and infrastructure updates has done much to change people’s perception of Bitcoin. The Lightning Network and Stacks, for example, are two Bitcoin layers that have enabled everything from DeFi protocols (like LNSwap and ALEX, for example) to NFTs on the Bitcoin blockchain.
Speaking of Bitcoin NFTs, the launch of the Ordinals protocol in 2023 catapulted more builders back into the Bitcoin ecosystem and motivated existing builders to just keep building. The protocol not only led to the boom of Ordinal marketplaces where users could get their hands on the latest inscription collections. The inscriptions, themselves, were a testament to how updates like SegWit and Taproot could be used, and led builders to dream about what other use cases could be built using Ordinals technology.
In fact, the Ordinals boom was ultimately a catalyst in much of the positive sentiment around Bitcoin, even among institutions outside of the Bitcoin sphere. This, coupled with Bitcoin’s name recognition, status as an industry leader and higher-than-average use cases mean that it will likely be the first token to also breach the mass adoption barrier. Already, there are numerous companies that allow for e-commerce payments to be made with BTC, and that list keeps growing.
Plus, building more use cases on Bitcoin also puts Bitcoin closer at achieving its intended purpose: empowering individuals through decentralized and trustless technologies. This includes providing increased banking access to the unbanked and giving users the biggest say in how they want to use their assets.
But if you want to empower users, you’ll also need to give them access to the resources they need to understand what they can do with their BTC. Education will play a major role, particularly when it comes to giving users the tools to navigate (or even enter) the space. Right now, many people who want to use digital assets have to grapple with complex infrastructure. While some platforms are more streamlined than others, exchanges, DeFi protocols and crypto wallets are still a new concept to many. Confusion about the process and complicated UX can drive people away. There are revolutionary tools being built on Bitcoin, but people need better exposure to them.
This includes education around security concerns and more accessible information about how trustless technologies work. While people may inherently know that trustless technologies – in reducing the need to rely on third parties – are intended to minimize security risks, they often find it difficult to understand how. Introducing people to how a self-custodied wallet like Leather works is often a big step in helping them engage with the trustlessness and decentralization at the core of Bitcoin’s vision.
Fortunately, more organizations, companies, projects and individuals – including in the Bitcoin community – are pioneering crypto education. The Trust Machines Learn Center, for example, champions Bitcoin education while organizations like Base58 offer courses that teach new and more experienced Bitcoin users about developing protocols. Individuals like D++ also host their own workshops, projects and talks to educate users in different developments being made on Bitcoin and possible use cases that can be built on the world’s oldest blockchain.
A Coinbase/Morning Consult survey conducted earlier this year found that roughly 20 percent of Americans own cryptocurrency. That number has remained largely unchanged since 2022, despite market moves, and more educational accessibility could change that. These efforts may not bear fruit overnight. Blockchain technology has been around for more than a decade, but there are still many people who have little-to-no knowledge of how it works, what is being built or what long-term opportunities it presents.
Education is also key for another area that has left many Bitcoin and crypto users uncertain about their ecosystems’ future: policy. It’s almost impossible to talk about the future of cryptocurrency without discussing the policy landscape. There is no doubt that the uncertainty around frameworks will have an impact on growth, and many of these issues remain unresolved.
In the United States, groups like the Blockchain Association (which Trust Machines is a part of) advocate a pro-education approach to crypto and blockchain policy. If lawmakers have the resources they need to understand blockchain and interact with it, then the policies they enact will be more likely to embrace the realities and opportunities of the technology.
Globally, the story has progressed further with many jurisdictions developing robust and practical policy frameworks to spearhead new advances in blockchain. The EU, United Kingdom, Japan, Singapore, UAE and China have all either introduced or are in the process of introducing permanent policy frameworks for crypto. This trend has driven crypto, in general, offshore and is one of the top reasons why it’s essential that blockchain enthusiasts work together to advocate for policies that will help the space grow.
As TechCrunch reported last month, a recent Electric Capital report showed that “the United States was home to 42% of the world’s open source blockchain developers in 2018. By 2022, that dropped to 29%.” This is a trend that demonstrates the impact that clarity and stability can have on building up the blockchain industry in any region.
Bitcoin Isn't Going Anywhere
Just as the dotcom bubble burst failed to kill internet-based businesses, this bear market has not killed cryptocurrency. Bitcoin, especially, is too entrenched to fade away, and its potential to give individuals the power to recreate the financial space as we know it is a longtime vision that still binds the Bitcoin community together.
While the so-called ‘crypto winter’ may have slowed progress in some ways, the existing mechanisms, developments and draws of Bitcoin ensures that its growth trajectory remains significant. But to succeed, adherents need to understand that there is more work to be done in educating and expanding access.
Ultimately, increasing the general public’s understanding of the technology and giving them the tools they need is critical to weathering any future contractions. If crypto companies and enthusiasts work to make the blockchain space more user-friendly, secure and accessible, then it can truly become the transformational power that it promises. The current Bitcoin ecosystem already has much of the infrastructure needed for this power to be realized, and the foundations for a truly decentralized future as envisioned by Satoshi Nakamoto with Bitcoin’s creation.