The future of blockchain technologies in financial markets

 When Satoshi Nakamoto introduced the Bitcoin (BTC) white paper over a decade ago, it was hard to imagine what role the cryptocurrency sector would play in global finance. Some argue that the invention of blockchain technology is comparable to the revolution brought on by the invention of the internet back in the 1980s. Starting as a niche space for tech enthusiasts, in just 12 years Bitcoin has become a serious player in the financial field, with its market capitalization closing in on Google, one of the world’s largest tech giants.

              Crypto-future (@crypto_nitro) | Twitter

One of the reasons for the increasing popularity of, and people’s increasing interest in, crypto lies in the fact that the technology that forms the backbone of cryptocurrency promises more financial inclusion compared with legacy finance. It is especially important for developing countries and emerging markets with fast-growing economic potential — the regions with the most promising potential for mass crypto adoption. And while blockchain cannot solve all of society’s problems, it’s the community behind this industry that should address the factors causing financial exclusion. Being decentralized in its origins and driven by the community, the crypto industry indeed greatly prioritizes diversity and inclusion, including valuing the contributions of women and the LBGTQ+ community.


The general public discourse on the crypto space still suffers from the notorious reputation of the Silk Road saga and the ICO craze back in 2017 — 80% of initial coin offerings ended up being scams. Meanwhile, by appealing to the younger generations — who will soon enough be the major drivers of the world’s economy — crypto is certainly gaining its momentum. Just last year, PayPal, the world’s largest payments processor, announced it would allow its customers to buy, sell and hold cryptocurrencies, and the demand for that service has been greater than the company expected.


Also last year, the world witnessed the rise of the decentralized finance industry, and some even argue that DeFi will complete what Bitcoin started, proving “to be the guarantee of a better, more liberated future.” DeFi has become a symptom of the real shift from centralized to decentralized services, fueling massive innovation and growth in Web 3.0 protocols and the demand for the decentralized internet. Since the old financial system has rotted and degenerated, we have witnessed an unprecedented amount of money-printing by governments all over the world amid the COVID-19 pandemic. DeFi brings forward the prospect of a paradigm shift, promising not just the democratization of money but the democratization of finance, representing a seismic shift in the way people will bank in the future.


Due to its decentralized nature, the crypto industry is not and will never be a local trend — the changes that it causes to the financial landscape are global. With central bank digital currencies, or CBDCs, being researched by governments all over the world and more institutional players — such as MicroStrategy, Mastercard, Bank of New York Mellon, Tesla and many others — entering the space, it seems inevitable that the global economy will have to accept that crypto, and the technology behind it, is here to stay. These examples also clearly represent signs that the industry is maturing.


Meanwhile, not all countries treat crypto equally: India has had a difficult relationship with the crypto space for some time already; China is leading CBDC development; the European Commission has proposed its Markets in Crypto-Assets Regulation, which has raised concerns within the crypto industry; and in the United States, while the crypto space is hopeful about new appointments in the administration of President Joe Biden, regulators are tightening the belts for crypto users. Cointelegraph decided to reach out to experts from China in the blockchain and crypto space for their opinions on the following question: What role will emerging technologies — such as blockchain, crypto and DeFi — play in shaping the future of finance in the world in general and in China specifically?


Bobby Lee, founder and CEO of Ballet:

“I think the way that blockchain and crypto have changed finance globally is by essentially introducing a brand-new asset class. Traditionally, the world only had gold and silver. After that, we had the invention of paper money, which became currency, and that was a new asset class. And then after a few more hundreds of years, the invention of stocks. Equity stocks in a company became the notion of ownership in the company, so stocks became an asset class. And of course, we've had loans and bonds. So, whether it's government or corporate bonds, that's another asset class.


And what we're seeing with crypto for 12 years now is that we have Bitcoin and now a new asset class called digital currency. Now, it's called digital currency, but it really doesn't have to be used like currency. It should be just treated like a new asset class. But why do we need that new asset class?


The issue with paper currency is that people in power always want to change rules to sort of strengthen their power over and hold on the economy, and thus over the people. So, they introduce the notion of unlimited printing. And this was only introduced in 1971. We're now at the 50-year anniversary of this new kind of asset class, which has a new feature: unlimited printing. Pretty much, before 50 years ago, the U.S. dollar did not have unlimited printing because it was backed by gold. So, you couldn’t have unlimited printing, but now you can have a little bit of printing because you've uncoupled from gold. Fiat currency has changed.


And now because of its change, the world’s locomotive has introduced a new asset class called Bitcoin, which is meant to counterbalance the change in fiat currency — to give people and give the world a choice. Do you want to continue to use an asset class that keeps on printing with no limit? Or would you prefer to put your savings at value into an asset class that has a strict upper limit of 21 million units? That's what crypto is bringing to the world.


Important questions are: Who wins? Who's right? Who's wrong? I think crypto will win because of its limited issuance, strictly limited in nature. My thoughts on Bitcoin as an asset class can be read in my book The Promise of Bitcoin: The Future of Money and How It Can Work for You. Cryptocurrency is bringing to the world the notion of a new asset class. And it's also bringing balance back to the world because before Bitcoin, the most relevant form of money was currency issued by governments, what we call fiat currency, and crypto has changed the very nature of it.”


Chang Jia, founder of Bytom and 8btc:

“First of all, the digital yuan mentioned in the first article, which integrates the cutting-edge blockchain technology and cryptography technology, has started to carry out the application in several first-tier cities in China. One could say that DCEP is already serving the national economy and the people’s livelihood. The prototype of China’s future financial network is gradually emerging. Therefore, in terms of digital finance, China is in a leading position over the world.


For the world, blockchain technology has a major mission in the future, including promoting currency internationalization, trade globalization and a better structure for the world’s top-level financial system to avoid the recurrence of a financial crisis.


At present, we can perceive that Bitcoin created by blockchain technology is becoming the preferred hedging asset of mainstream finance and has reached a market value of 1 trillion U.S. dollars within a short decade.


In the long process of financial evolution, Bitcoin and other high-quality cryptocurrencies will bring a new logical switch and asset portfolio to the world from the nature of currency and finance.”

Source: Cointelegraph

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