The creation of a crypto index, the most important task for cypto in 2022?
A new year is about to start, and if we follow historic charts it might not end up being a magnificent one for crypto evaluations. 2021 has been a good year for crypto, when it comes to value gains. There are no doubts about this. The positive trends may well continue well into 2022, but what happens once positive momentum eventually runs out?
A new year requires new ideas if we are to remain and grow. I think in order to avoid doom and gloom, it'll be very important for crypto to truly reinvent itself in 2022, so that old patterns can be broken. Is this possible, and if so, how?
For over ten years BTC has carried the bulk of crypto value, acting almost as a standalone index for all of crypto. In 2017 it was looking a little as though this era was about to end, until it wasn't the case at all and crypto became more heavily dependent on BTC more than ever.
In my opinion these are the key factors to why BTC is so central:
1. For a long time you actually had to buy BTC in order to get another crypto that you wanted to bet on. This relationship very directly put BTC in the center. As crypto loses its dependency of CEXs, and DEXs on various chains grow in importance with other currencies in the center spot the direct dependency on BTC as a "central liquidity provider" becomes lower.
2. BTC stands at the center of marketing of all crypto assets. It was the first real crypto, it's got an easy name and nobody really "owns it". In this sense it has become "everybodys", perhaps in a more true sense than any other crypto. Its centre spot has helped to draw the attention of more and more powerful and wealthy people who end up promoting it.
3. Rich and powerful entities are still gathering BTC at the cost of other crypto and using other crypto merely as tools to gether up more BTC. Trying to "win the market game", beting that BTC already "won" the "game of cryptos". As a result market algorthms and bot patterns will end up favouring BTC over other crypto, especially in centralized exchanges.
4. There exists no real crypto index, to bet on. So if you want to bet on crypto in general, BTC is the closest thing.
Because of these reasons crypto has ended up "following BTC" in good times and bad times. But must it really be so?
There is after all nothing magical about BTC. Though it is the natural king of the PoW consensus since it's supported and maintained by the most powerful ASIC miners in the world, competing PoW networks are easily squelched these entities don't really have any power whatsoever over more enviornmentally friendly POS networks.
Most of crypto is likely to be better off if it can shed its dependance of BTC, and as bad times will at some point be coming the sooner that happens the better.
Out of the 4 reasons above 1 is already crumbling, 2 is probably partly a very good thing and 3 is tough to control (unless you're already part of what's controling it), but 4 should be extremely easy to fix.
The advancements made in synthetic assets is already a step on the way in achieving this. If there can exists synthetic USD, Gold, Silver and stocks, so too could there exist synthetic BTC, and also the much more interesting synthetic crypto index, which follows the market capitalization of the 100 most valuable crypto currencies. Such an asset would thrive even in a situation where BTC falls and ETH takes over its role, or where no asset really dominates and a number of assets stay equally relavent. As long as some crypto is valuable so too would the crypto index be. It'd be a true "safe bet" on crypto as long as crypto itself remains relavent.
And if we can make such an asset popular this year, then I do think we could also overcome another long term BTC bear cycle. That's why I think it should be a focus this year. Who makes it happen, I don't know, but I do think it'll happen and I'd absolutely love to see it roam on the Fusion blockchain.