Money Isn't Everything -- Use Cases Expand as Prices Drop for Bitcoin & NFTs

Price fluctuations aside, experts are bullish on the expanding roles of Bitcoin and NFTs.

For much of its short history, the crypto world has been looking for a solid use case that proves the viability of Bitcoin as a currency. In El Salvador, it seems to have found a use case with real scale. 

On Wednesday, El Salvador, a Central American country with nearly 6.5 million people, passed a new law that made Bitcoin legal tender. The law has been called “mostly symbolic”, but it does represent some real changes in practice. 

Other nations have previously recognized Bitcoin as one valid form of payment -- but El Salvador is the first to make it legal tender. Bitcoin can now be used to pay loans and taxes and converting Bitcoin to other currencies will not be subject to capital gains taxes. Businesses in El Salvador are required to accept Bitcoin -- if the technology is available. 

Nearly 70% of El Salvador’s residents are unbanked and need to use cash -- which since 2001 has meant U.S. Dollars -- to pay bills, loans, and taxes, a situation that can be addressed using crypto. Residents in El Salvador received $6 billion in remittances mostly from relatives living abroad, and using Bitcoin will greatly reduce fees and make the process of sending and receiving money globally more convenient for Salvadorans. 

In exclusive comments to Benzinga Crypto, crypto promoter, entrepreneur, and philanthropist Brock Pierce was suitably energized. 

“It’s amazing to see elected leaders recognizing and acknowledging the important role that technology and innovation play in creating a better world and future. The President of El Salvador is clearly, like Mayor Suarez from Miami, someone that is leaning in and recognizing that change is a constant in the universe. It’s not about whether or not it happens, but how we adapt to it,” Pierce said.

Pierce is alluding in his comment to the concern that Bitcoin in its current state is too volatile to serve as a viable national currency. The price of Bitcoin has raised and dipped wildly during 2021, and May 2021 was one of its worst months on record, taking the price briefly down to just over $31,000. Pierce believes that the benefits outweigh the volatility and that El Salvador’s move is the beginning of a trend.

“I think this is the beginning of a series of countries doing this. Paraguay has announced that they are looking to do this, Nicaragua is looking to do this, Mexico has announced in some way that they’re looking to do this,” Pierce said. 

Analysts are concerned that the Bitcoin announcement could jeopardize El Salvador’s discussions with the International Monetary Fund (IMF). El Salvador is seeking a program through the IMF of more than $1 billion, and a parallel currency with this much volatility potentially puts the economy at risk. 

In an interview with Benzinga, Viktor Prokopenya, founding investor of, saw potential benefits but also some likely problems. 

“(President) Nayib Bukele’s decision is ultimately a symbolic one with an underlying message that helping the crypto industry effectively bolsters democracy; a win-win situation,” Prokopenya said. “The impending problem is that of inevitable tension that will continue to grow between cryptos and large governments: as democratized transactions irrevocably increase in popularity, the flow of cash into governments will become stunted. Something will have to give way eventually and given the current hostile attitude of many large central banks towards cryptos, this is shaping up to be a significant financial event with ramifications for years, if not decades.”

El Salvador President Bukele has increased his appeal to the blockchain world, inviting investment in crypto ventures, offering citizenship to anyone with a certain amount of Bitcoin, and announcing the development of a geothermal solution to power environmentally-friendly Bitcoin mining in El Salvador. 

May was a Bear for NFTs

Non-Fungible Tokens (NFTs) have been another rising star of the crypto world in 2021. Not as famous as Bitcoin, of course, but working its way toward household name status. Notable events like the sale of Beeple’s digital art NFT sold at Sotheby’s for $69 million created a frenzy of enthusiasm in the press and among investors. At least for a while.

According to a report from Protos, the NFT market peaked on May 3, 2021 with $102 million in sales on that day and over $170 million in total sales that week. NFT dropped to just $19.4 million in sales at the beginning of June -- a drop of 89% month-over-month. 

In an interview with Benzinga, Michael Arrington, founder of TechCrunch and Arrington XRP Capital, said that sales numbers are not the important thing to focus on with NFTs. 

“I don’t think that the price is the determining factor when it comes to NFTs. This is an entirely new model. It started as a niche product, almost a toy -- like many great products. Now NFTs are on the verge of transforming not only the crypto world but the real world, too,” Arrington said. 

Arrington worked with Propy to offer the “world’s first Real Estate NFT” -- his Kyiv Apartment, which was already distinguished as the first property to be sold on blockchain in 2017, sold for nearly 5x the starting bid and $94,000 over market price.

“NFTs are definitely here to stay. I’d like to differentiate between price and value. The real value of the NFTs comes in the form of innovation and exciting new ways to invest and build the future. The possibilities are endless,” Arrington said. 

Ryan Bethem, Co-Founder and COO of Chintai pointed out that even though NFTs have unprecedented heat in 2021, price adjustments around them are not unprecedented. 

“This is not the first time NFT sales have gone through a cycle like this. NFTs tend to move with macroeconomic conditions. Crypto kitties being the first major breakthrough for NFTs in the 2017 bull market foreshadowed this most recent resurgence. We’d say it’s less about diminishing hype and more about market recalibration -- which is also happening in the macrosphere of crypto. Except, this time NFTs have penetrated the consciousness of the general public and the use cases are far more tangible. Once the dust settles, the better use cases and applications will persist,” Bethem said. 

Jack Fonss, a crypto innovator who is currently auctioning the first patent to be packaged as an NFT, believes that though the initial hype may be fizzling, NFTs have a strong future. 

"I believe that the novelty of the NFT format has attracted many early adopters and hobbyists, so lots of the early activity was experimentation and some was hype. But I expect the long-lasting benefits of this experimentation phase has gotten users comfortable with the technology and the platforms, and many of the legal considerations -- important for NFTs' next act."

Brent Bucci, VP of Communications at, said in an interview that to see the real motivation of NFT buyers, one must look beyond price. 

“When it comes to the motivations of the individual NFT buyer, there is one huge misconception that is occurring: Most individual NFT sales are motivated by buyers who A. Want to "show off" -- think of it as a Rolex for the crypto generation, or B. Have a strong connection to the brand or artist. For businesses, there is a huge opportunity to elevate their brand relationships with their most dedicated customers, in addition to the potential usage of NFTs as an authenticator for real-world goods. Institutional Investors really only should be looking at a few famous NFT options to hold in their portfolios,” Bucci said.

Akasha Rose, Communications Director of Sheesha Finance expects that ultimately the market will increase as NFTs change the way users interact with art and collectibles. 

“From my perspective, the market for crypto art will only increase. In the past, only the elite had their own private galleries. Now anyone can have their own private gallery on their mobile phone and view their private collections of NFT art as augmented reality in their own homes. Just like we read books on Kindle now, not on paper, in the future we will look at the art on our walls through the screen of our mobile phone and not in prints or physical frames,” Rose said. 

Dino Lewkowicz, director at 4ARTechnologiesAG, pointed out that art investments are not typically speculative in nature and this period of price adjustment may ultimately be desirable. 

“Art & collectible investment is not highly speculative, as prices don’t fluctuate immensely. A Gerhard Richter or Ferrari 250GTO does not triple its value within a year. They average at around a 10% increase per year. A solid investment with limited risk. At the end of 2020 and the beginning of 2021, NFTs were purely speculative with astronomical prices. Artworks by Beeple went from USD 10-15 thousand to famously near USD 70 million. That change is obviously not sustainable. It appears that the short-lived speculative gold rush is over, with the market now returning to realistic investment values. That makes them further interesting for institutional investors, not less, as it is no longer a gamble, but a calculable investment,” Lewkowicz said.

Regulatory Woes for NFTs

Although opinions differ on when and how NFTs will be regulated, the consensus seems to be that they will be regulated -- but ultimately that may not be a bad thing. 

Peter Klamka, CEO of MORE Brands, said: “If they fail the Howey Test and are being promoted as an investment, they should be regulated. If they are objects to be used and/or collected by fans, then they aren't securities. Just because something goes up in value doesn't automatically make it a security. Trading cards go up -- and down -- in value and aren't a security. Vintage concert t-shirts go up in value and they aren't considered a security. Context matters.”

Jeff Kirdeikis, Chief Executive Officer at TrustSwap advises that NFT creators seek legal advice from experts as they develop their projects.

“NFT regulation is still a grey area among the majority of regions… Prior established guidelines in specific nations have demonstrated the obligation of cryptocurrency-related sales to be considered for income or sales tax. Therefore the obligations of NFT traders vary according to the jurisdiction. We expect cryptocurrency and NFT-related guidelines to develop in the following years. Currently, the ideal path for investors is to get advice from legal experts regarding the treatment of their digital assets,” Kirdeikis said.

Sound advice, of course, but the regulatory structure is still an evolving landscape, so more shocks are likely. 

“We expect to see a highly disruptive transition period coming when -- not if -- governments globally commence adding forms of regulatory compliance to some forms of NFTs. This will lead to a number of first-mover marketplaces failing to be able to adapt, and opportunities for new entrants to adopt digital asset compliance solutions and rapidly offer solutions for NFTs to migrate. As with the regulations imposed upon ICO's, we can expect to see high profile legal cases, fines, even some arrests, alongside a gradual maturing of the industry that also helps fuel meaningful mainstream NFT usage and adoption too, within regulatory framework blockchain solutions like Chintai,” Bethem said. 

Cover image modified from photo by Oswaldo Martinez on Unsplash

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