Opinion by: Kamal Mokeddem, General Partner at Finality Capital
The prevailing institutional narrative around altcoins is that this: If you must get into cryptocurrencies, just buy Bitcoin and move on.
Bitcoin now has ETFs and has outperformed just about all other digital assets. Unlike 2017 or 2021, there was no broad altcoin rally on this cycle. At its peak in 2021, greater than 2.6 million tokens were energetic; Today there are greater than 42 million. No wonder many individuals think the sport is over.
This perspective is lazy and flawed. The lack of an “altcoin season” doesn’t mean a scarcity of opportunities. This means the market is maturing.
The free-for-all token rallies of 2017 and 2021 are behind us because of oversupply, poor tokenomics and retail fatigue. To confuse the top of indiscriminate speculation with the demise of altcoins is to miss the actual story. These tokens not attempt to compete as a currency. Instead, they have gotten one of the vital powerful growth marketing tools we’ve got ever seen.
Bitcoin is just not the benchmark
Bitcoin won’t prevail as the popular monetary asset. All tokens have a non-zero monetary premium. The one almost definitely to receive the most important financial premium is the one mostly used as a method of payment. It is predicted to be the native token that hosts the preferred Web3 applications. It's too early to say whether it would be Ether, SOL or something else, but it surely almost actually won't be Bitcoin.
Altcoins are transforming from speculative chips to fundamental business primitives. They should not excited by replacing Bitcoin. They're about accelerating adoption, moving users out of Web2 silos, and constructing latest networks faster and more cost-effectively than some other company in history.
The consequences of such an introduction will change the Internet as we understand it. The value of Web2 firms is dependent upon their ability to hoard and monetize data. Once this data becomes portable, verifiable and user-controllable, the moat that maintained these monopolies begins to diminish.
Altcoins should not dead. They have simply found their purpose as growth engines disguised as assets.
ZkTLS and verifiable data
The biggest unlock for altcoins is technical. Zero-Knowledge Transport Layer Security (zkTLS) – a mechanism for cryptographically verifying all data exchanged over HTTPS – now makes it possible to rework isolated Web2 data into verifiable input on Web3.
This opens the floodgates for brand spanking new applications. In the fintech space, a employee can prove their payroll on-chain and immediately access a USDC loan via a debit card – no payday lender required. In promoting, influencer posts could be linked to verified conversions and paid for without opaque intermediaries. Identity-driven services like rideshare drivers can transfer their history across platforms and receive symbolic incentives for switching providers.
The implications go even further. Transfers could circumvent money transfer monopolies. Tokenized credit scores could expand financial access in emerging markets. In healthcare, patients could provide evidence of their medical records without revealing private information.
In e-commerce, verified purchase histories could unlock loyalty rewards across multiple platforms. In the infrastructure sector, projects are already using tokens to construct decentralized 5G networks. In AI, networks also show how tokens can coordinate global computing power and data.
In any case, tokens should not just abstract assets, but incentives – the fuel that turns users from old incumbents into latest challengers. On Web2, firms like Uber and DoorDash spent billions on subsidies to draw drivers and customers. Using tokens, startups can achieve the identical effect with far less capital, reducing the time it takes to construct a two-sided market.
Examples of this exist already in crypto-native markets. A brand new exchange can “vampire attack” incumbents by rewarding traders who can display their volumes elsewhere. Wherever data could be verified, tokens could be used to redirect attention and liquidity.
Now it's necessary due to maturity
All of this is feasible since the crypto tech stack is mature. In the early days, only hyper-technical founders could ship products. Now the fundamental constructing blocks—databases, storage, identity layers—are in place, opening the door for business-minded founders to construct billion-dollar firms in Web3.
This is strictly how the Internet developed. In the Nineteen Nineties, technical founders were replaced by entrepreneurs because the stack stabilized. The result was no fewer firms – it was Amazon, Google and Facebook. We are approaching the identical tipping point within the crypto space.
The timing is essential. The trillion-dollar promoting market is ripe for disruption. The fintech, social media and cloud infrastructure sectors are also experiencing growth. Web2 monopolies are based on hoarding user data. Web3 unblocks it. Tokens function an incentive layer that permits switching.
For institutions, the largest mistake is assuming that Bitcoin ETFs are such as crypto exposure. While Bitcoin stays the reserve asset, the actual venture-style upside is occurring in tokens that power applications. Ignoring them is like ignoring the Internet in 2000 because Pets.com went bankrupt.
The risk is asymmetrical. Allocate now while the space is unpopular and valuations are reasonable, or wait until the incumbents get into trouble and pay 10x more for a similar commitment.
Either way, the adoption is imminent. The only query is whether or not you attend early or arrive late.
Opinion by: Kamal Mokeddem, General Partner at Finality Capital.
This article is for general information purposes and is just not intended to constitute, and shouldn’t be construed as, legal or investment advice. The views, thoughts and opinions expressed herein are those of the creator alone and don’t necessarily reflect the views and opinions of Cointelegraph.
