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(Kitco News) – Although he’s the head of strategy for Bitcoin-rival and blockchain platform Solana, Austin Federa has nothing but respect for the top coin’s unmatched valuation today and the industry that has grown up around it.
But this known and growing competitor also told Kitco’s Matt Nesto that the “most exciting work” within the broader blockchain industry is happening elsewhere, including the development of smart contracts.
“Bitcoin fought its way to where it is today, and I don’t think any of us would be here (without) the success of Bitcoin,” Federa said before addressing the other side of the coin, so to speak.
“I think there are some parts of the world of crypto that have just moved on from Bitcoin,” he added, such as the ability to actually run programs in a decentralized manner across any blockchain, such as Uniswap on Ethereum, or NFTs or what he calls “the DeFi revolution.”
“You can’t really do that on Bitcoin, and that’s okay, but a lot of (Bitcoins) value is derived from doing just one thing really well,” he added.
One of Many
In using the analogy that Bitcoin has always compared itself to digital gold, but even so, Federa made the distinction that there’s still a role for gold in the market.
“Gold is not 80 percent of the traditional financial space. It is not 80 percent of the world’s market cap. It has a role to play in that space and I think Bitcoin is something very similar,” he said. “It started out as the only thing, and now it’s one of many things.”
Said another way, Federa explains that if an investor were to only hold a single commodity in their portfolio, there would be far less opportunity to do other things with it.
That may be so, but Bitcoin’s dominance within the digital asset space still stands at close to 50% of the total crypto universe, and arguably even higher ratios when it comes to ownership, global scope and scale, and brand recognition.
Big Banks and The Coming Migration
It won’t happen overnight but from Federa’s purview, the migration from Bitcoin to other digital assets and platforms is already well underway and poised to accelerate.
“I think more and more of the traditional financial space is going to start transacting on blockchain because it offers things like incredibly fast finality and settlement,” he said, noting the ability to send an unlimited amount of money anywhere in the world in less than a second for a fraction of a penny.
“That is not something that the SWIFT network can support. That’s not something that any other money transfer system in the world can do,” he said.
In fact, he said, the new consumer-focused use cases are already coming — and will continue to come — from companies like Visa which he said was currently building on the Solana blockchain to do merchant bank settlements using USDC.
Don’t Ruin a Good Thing
Like many executives and investors working in and around the crypto universe, the most pronounced area of concern dampening Federa’s otherwise optimistic outlook involves uncertainty surrounding the regulatory — particularly in the US.
“It’s really tricky,” he said, “but what I would say is that in the United States specifically, there are no rules of the road to follow.” For example, Federa points to what the SEC is doing with enforcement through action as opposed to a more deliberative, inclusive, and intentional rule-making process.
As a result, he said it is really hard for companies to adapt to an ever-changing and potentially punitive climate.
“This is not crypto-specific,” he added. “You see this in every industry where Congress is not passing legislation, and instead, we are seeing enforcement as a way of making rules, which is not a good way to go about it.”
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
