A bear market is a great time to discuss why we do the things we do in the cryptocurrency space and ask ourselves “Why?”
Bitcoin, to most people, is like an abusive spouse: you can’t control them, you can’t placate them, and if you decide to subject yourself to “their” way of life you give up a certain amount of freedom.
As CoinMarketCap shows, when Bitcoin sneezes the entire market catches a cold. This is, of course, because every single asset is correlated to Bitcoin as a result of BTC being the dominant base pair. As it is the most accessible and common cryptocurrency, this “global reserve currency” status is implied through how the ecosystem trades other currencies.
How then might one break up with Bitcoin, known as “decoupling” the price?
The Volume Play
One way to decouple the price is by increasing volume across other base pairs, such as USD or EUR. Ethereum attempted to do this via addition to Coinbase and other major exchanges, but failed as a result of crypto-centric margin platforms. It simply wasn’t, and still isn’t, possible to generate more fiat volume than crypto volume as a result of peer-to-peer margin trading.
The Economic Play
Recently one of my most active currencies, Tao, was delisted from BTC pairings. This occurred on the exact day our use case launched, which was an exchange platform for the hosting and sale of blockchain commodities like Bitcoin (and celebrity branded cryptocurrencies). This presented a unique economy opportunity which our community is now exploring.
The cryptocurrency was actively traded for over two years in open markets, on multiple exchanges, however for the moment it has no BTC price at all. If a platform, such as for instance Alt.Market, only lists Tao against USD pairs, Tao cannot have a BTC price unless it is traded on other exchanges and those other exchanges become volume dominant (see above).
Now this has become an experiment in community governance of the economic consensus of the network. It is completely non-contentious as the network participants win no matter what. If Tao gets listed against BTC on wider exchanges, and those exchanges carry the majority of volume, Tao may not decouple from BTC pricing. However, should AltMarket retain the majority of volume in USD pricing, Tao will decouple from BTC pricing… and so will all assets traded exclusively against Tao as a base pair.
This environment could potentially create an entire market of non-correlated cryptocurrency assets, providing a natural market balance to Bitcoin’s abusive behavior towards those who rely upon it.
Tao is also 100% proof of stake, Bitcoin-derived altcoin, so there’s a certain reputations on the line should Tao ever reach wider circulation. There’s a whole lot of smack talk about proof of stake that would suddenly be put to the test head-to-head against the king of crypto.
I’m certainly up for the challenge.
Let’s find out what happens.