While change is warranted, the scale and scope of that change is not. For the financial industry, blockchain, the technology that underpins bitcoin (btc), ether (eth), non-fungible tokens (nfts), and other digital assets, has brought us to a crossroads.
What will the future of money look like?
Reading: Bitcoin is a digital property that has no replacement
We have been operating on the front lines of cryptocurrency for the past 10 years, protecting investors large and small alike and enabling them to invest in this exciting new frontier of finance. the experience we have gained here helps us to see what is coming down the road.
In this historical period, a myriad of outcomes are possible, but one thing is certain: the efficiency and innovation of technology will influence far beyond traditional financial sectors.
Mature Digital Asset Industry Approaches
Blockchain offers 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 simile: “[the old financial structures] are like a rush-hour traffic jam that traps a Formula 1 racing car. In a digital world, the way we regulate and maintain control administration has to change.”
From generation to generation, technologies have updated the way we complete financial transactions. the modern credit card has been around since the late 1950s, the first proper sale over the internet was completed in 1994, paypal was founded in 1998 and went public and sold to ebay in 2002, and satoshi nakamoto started the revolution of the blockchain in 2008. Today, the financial heavyweights are no longer on the sidelines. and 55 of the 100 largest banks in the world have some kind of exposure to this new technology.
The first international standards were issued in Japan in 2016 after attacks on crypto exchanges, including an 850,000 btc theft against mt. gox. Because the success of any financial market relies on the predictability, safety, and overall efficiency of the market, regulators continue to contemplate the direction and viability of their involvement in cryptocurrencies.
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Regulators and companies want to ensure that investors enjoy certain protections in any market, digital or otherwise, to encourage participation. Think of the Federal Deposit Insurance Corporation (FDIC) for US banks or eBay’s money-back guarantee. Without regulation, market participants may be exposed to long-term and short-term risks.
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Regulators also ensure that markets play by a fair set of rules. As Commodity Futures Trading Commission (CFTC) Commissioner Dan Berkovitz said in June:
And, more importantly, it’s not just regulators and governments that will decide the future; it is about us, the investors, the leaders and the consumer in general, deciding 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 an evolution of language. regulation and widespread adoption will change the way the media and the public perceive and talk about digital assets.
crypto will retain its unique character as it matures, don’t expect the talk of hodl, fud and “to the moon” to go away, but it’s critical that a broader cohort of blockchain investors feel comfortable within the space.
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It may seem like a small thing, but attention to merging the languages of crypto and institutional finance has allowed us over the last 10 years to work with a variety of institutions, from neobanks, fintechs and brokers to banks, hedge funds coverage and families. offices.
The evolution of the language occurs alongside larger investors seeing the long-term value of blockchain proven over time as they begin to diversify major holdings to include crypto, thus increasing the association between these new assets and the assets inherited that have had historical values. security, such as gold, bonds, or fiat backed by the central bank.
In business, you’re judged by the company you run, so we won’t get that “warm hug” without embracing the language of financial services and regulators more broadly.
However, it is not unreasonable to imagine valuing cryptocurrencies as a commodity rather than a digital currency: us. uu. Federal Reserve Chairman Jerome Powell told Congress in 2019 that Bitcoin was a “speculative store of value” like gold. but bitcoin is not the whole story, just the most talked about. the industry needs to stop focusing on a particular use case for technology and start talking more about money, investments, financial management and smart payments.
related: blockchain technology can change the world, and not only through cryptocurrencies
the industry is bigger than any token
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We have found over the last 10 years that clients are increasingly attracted to assets that have utility and can solve complex problems.
Different digital currencies have different use cases. for example:
- tether (usdt) would work well to pay salaries because it is tethered, tied, to the us. uu. dollars, thereby avoiding the volatility of bitcoin.
- brave’s basic attention token (bat) is charting a course for the future of online content by issuing payments, in bat, to users of your browser to view ads. those users can tip anyone on the internet using the bat in their digital wallet.
- and the audius (audio) governance token makes a compelling case for cryptocurrencies to play a larger role in the future of the music industry, providing security, exclusive access to features, and governance of community property for artists and fans.
Blockchain is about solving problems, not taking over the world, replacing fiat or banks, a common misconception among the general public. while btc may be the most recognizable digital asset because it has name recognition and came first, it is just one asset class among many.
so what does the future look like?
Congress opened the doors to regulators earlier this year when the Senate passed an infrastructure bill containing an amendment that brought new scrutiny to the crypto industry.
Investors, digital asset exchanges, savvy technologists, government officials, regulators, and everyone else will benefit from a more mature marketplace that protects its consumers and values transparency, predictability, and honest communication. Similarly, most benefit from clarity about which digital assets have real value and which exist as manipulation tools to make the rich richer.
We’ve been there since the beginning and we’ve seen the ebb and flow of trends. but we have also seen that what survives at the end of the day are always brilliant ideas that solve the emerging problems of our time.
yes, change is here. the mature digital asset industry has begun to emerge in recent years, bringing with it a synergy of language that has become more sophisticated and inviting a broader audience to our table. the assets and information that this new audience brings will, in turn, provide great confidence across industries. that trust will lead to the adoption of blockchain technology to unravel problems no one dreamed could be tackled with blockchain.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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