While a change is guaranteed, the scope and extent of that change are not guaranteed. For the financial sector, blockchain, the technology on which Bitcoin (BTC), Ether (ETH), non-fungible tokens (NFT) and other digital assets are based, has brought us to a crossroads.
What does the future of money look like?
For 10 years we have been in the front line of cryptocurrencies, protecting large and small investors and enabling them to invest in this new and exciting frontier of the financial world. The experiences gathered here help us to see what lies ahead.
Endless results are possible in this historic time, but one thing is certain: the efficiency and innovation of technology will impact well beyond traditional financial sectors.
The mature digital asset industry is coming
Blockchain provides a faster, more efficient, and more secure structure for financial transactions compared to the contracts, transactions, and records that currently define our economic, legal, and political systems. Harvard Business Review put it succinctly with this parable “[Las antiguas estructuras financieras] they are like a rush hour traffic jam trapped in a Formula 1 racing car. In a digital world, the way we regulate and maintain administrative control must change. “
From generation to generation, technology has updated the way financial transactions are carried out. The modern credit card has been around since the late 1950s, the first real online sale was in 1994, PayPal was founded and listed on the stock exchange in 1998 and was sold on eBay in 2002, and Satoshi Nakamoto started the blockchain revolution in 2008. Today the heavyweights of the financial world are no longer on the sidelines. And 55 of the 100 largest banks in the world are exposed in some way to this new type of technology.
The first international regulations were enacted in Japan in 2016 following hacks against cryptocurrency exchanges. including a robbery of 850,000 BTC against Mt. Gox. Because the success of any financial market depends on the predictability, safety, and overall efficiency of the market, regulators continue to scrutinize the direction and viability of their involvement in cryptocurrencies.
Regulators and corporations want to ensure that investors in any market – digital or otherwise – enjoy some protection to encourage participation. Think Federal Deposit Insurance Corporation (FDIC) for US banks or eBay’s money-back guarantee. Without regulation, market participants can be exposed to both short and long-term risks.
The regulators also ensure that the markets play by the same rules. What Commodity Futures Trading Commission (CFTC) commissioner Dan Berkovitz said in June:
“It is unsustainable to have an unregulated and unlicensed derivatives market compete side by side with a fully regulated and licensed derivatives market.”
And most importantly, it’s not just regulators and governments that will decide the future: It’s about us, investors, executives and the consumer in general who decide how we want to use digital assets in the future.
Evolving language for useful digital assets
As the market matures, the cryptocurrency industry will also experience language evolution. Regulation and widespread adoption will change the way the media and the public perceive and talk about digital assets.
Cryptocurrencies will retain their unique character as they mature, don’t expect the terms HODL, FUD, and “to the moon” to go away, but it is critical that a wider cohort of blockchain investors feel comfortable in this space.
It may seem insignificant, but the attention to the amalgamation of the languages of cryptocurrencies and institutional finance has allowed us to work with a number of institutions over the past 10 years. from neobanks, fintechs and brokers to banks, hedge funds and family offices.
The evolution of the language comes at the same time as greater numbers of large investors see the long-term value of the blockchain as proven as they begin to diversify their main holdings into cryptocurrencies, thereby increasing the connection between these new assets and the assets. inherited assets that have retained their historical value, such as gold, bonds, or fiat money backed by central banks.
In business, you are judged by the company you run, so we won’t get this “warm hug” without using the language of financial services companies and regulators in general.
However, it is not unreasonable to think of the valuation of cryptocurrencies as a commodity rather than a digital currency: Federal Reserve Chairman Jerome Powell told Congress in 2019 that Bitcoin was a “speculative deposit” like gold. But Bitcoin isn’t the whole story, just the most talked about. The industry needs to stop focusing on one particular use case for technology and talk more about money, investing, financial management, and smart payments.
The industry is bigger than any token
Over the past 10 years, we’ve found that customers are increasingly drawn to useful assets that can solve complex problems.
Different digital currencies have different use cases. For example:
- Tether (USDT) would do well for paying salaries as it is pegged to US dollars, thus avoiding Bitcoin’s volatility.
- Braves Basic Attention Token (BAT) shows a path for the future of online content by issuing payments in BAT to their browser users for viewing ads. These users can then tip anyone on the internet who uses BAT in their digital wallet.
- And the Audius Governance Token (AUDIO) is a convincing argument that cryptocurrencies will play a bigger role in the future of the music industry and offer artists and fans security, access to exclusive functions and community-specific governance. .
Blockchain is about solving problems, not conquering the world or replacing fiat money or banks, a common misconception among the public. Although BTC may be the most famous digital asset because its name is well known and it came first, it is just one class of assets among many others.
So what does the future look like?
Congress opened the doors to regulators earlier this year. when the Senate passed an infrastructure bill that included an amendment that put the cryptocurrency industry under new scrutiny.
Investors, digital asset exchanges, savvy technologists, civil servants, regulators, and everyone else will benefit from a more mature market that protects its consumers and values transparency, predictability, and reliability. Plus, most benefit from the clarity of which digital assets have real value and which exist as manipulative tools to make the rich richer.
We have been there from the start and have seen the ups and downs of the trends. But we have also seen that at the end of the day it is always the brilliant ideas that survive that solve the problems of our time that arise.
Yes, the change is here. In recent years the mature digital assets industry has emerged, bringing with it more sophisticated language synergy and inviting a wider audience to our table. The benefits and knowledge that this new audience brings will, in turn, create great trust across all sectors. That trust will lead to the adoption of blockchain technology to solve problems that no one had ever dreamed of could be tackled on blockchain.
This article does not provide investment advice or recommendations. Every step of investing and trading involves risk, readers should do their own research when making a decision.
The viewpoints, thoughts, and opinions expressed herein belong solely to the author and do not necessarily reflect the views and opinions of Cointelegraph.
Julian Sawyer He is the CEO of Bitstamp and responsible for the company’s strategy and overall vision. Julian brings 30 years of financial services and consulting experience as well as hands-on experience in the home finance company from the ground up.