Yesterday, I came across a tweet by Marc Bernegger about WEF’s first council entirely focused on cryptocurrencies. The World Economic Forum (WEF) has created the Global Future Council on Cryptocurrencies. The job of the council will be to evaluate challenges and opportunities, bring together different stakeholders and members of the global ecosystem to improve governance and spearhead initiatives that approach money in new ways. This is the third initiative by the World Economic Forum, related to cryptocurrencies and blockchain. Earlier this year, in January, the WEF launched the Global Consortium for Crypto Governance and in 2019 it launched the Global Blockchain Council. These initiatives by the WEF are of great importance and will change cryptocurrencies forever. They will influence the interest and growth of digital assets and blockchain technology among some of the most elite institutions, governments and world leaders and create global standards that countries around the world can follow. WEF’s crypto initiatives are just another indicator that confirm cryptocurrencies have reached a level of maturity that no one can ignore anymore.
Ilias Louis Hatzis is the founder and CEO at Kryptonio “keyless” wallet, that lets users manage bitcoin and crypto, without private keys or passwords.
Three years ago around this time, Bitcoin already had its first hard fork resulting in the creation of Bitcoin Cash (BCH), China had cracked down on ICOs and exchanges, Jamie Dimon had called Bitcoin a fraud, yet Bitcoin was picking up steam hitting $5,000 in mid-October and reaching $20,000 a coin in by the end of 2017. Then the bubble popped and most people checked out. Yet, true believers kept believing and developers kept working hard to and build some of the needed infrastructure to fuel the market’s next jump.
Today the cryptocurrency market is a maturing industry with growing pains.
The cryptocurrency industry has gained legitimacy and attracted millions of new small and big customers. We’ve seen big money come into the market. MicroStrategy has invested $425 million in Bitcoin. Square has invested $50 million in Bitcoin. Paul Tudor Jones has invested somewhere between 1% and 2% of his assets in Bitcoin.
But this growth has come at a price. To build credibility and grow, Bitcoin and other cryptocurrencies had to play by the rules of the centralized world, not fully delivering on their decentralized promise.
The existing status quo Is trying to hold on. In late September the US and the EU made moves to standardize the cryptocurrency industry. A leaked draft by the European Commission known as the ‘Markets in Crypto-Assets’ (MiCA), spelled out a new set of rules for the crypto industry. Reuters reported that by 2024, the EU is planning to implement comprehensive cryptocurrency regulation. In the US, the Conference of State Bank Supervisors (CSBS) announced the launch of MSB Networked Supervision, a standard set of compliance guidelines for large Money Service Businesses (MSBs) in the US.
Crypto critics, often cite the speculative nature of cryptocurrencies and the lack of credible security standards. But since the bubble popped in 2018, we’ve seen innovations like asset-backed stablecoins, decentralized finance and security systems run by artificial intelligence.
When stablecoins first came around, they seemed boring. But the truth is that they have a couple of significant properties, and have shined a new light on cryptocurrencies. Firstly, they natively plugged into crypto markets, without the volatility of other cryptocurrencies. Secondly, they offered traders an easy way to convert volatile cryptocurrencies into a stable equivalent, without all the red tape and regulations required in fiat markets. On the other hand Defi is much closer to the decentralized nature of cryptocurrencies. Practically, DeFi creates a price between any two assets and that price, changes live right on blockchain. With Defi smart contracts, pricing markets becomes completely ownerless, once a contract is deployed to the blockchain.
Each is very important, but when you combine stablecoins and defi, you have a powerful domino effect. You can trade any digital asset without a centralized exchange and decentralized exchanges are propelled to the foreground. All the regulations that held back crypto adoption, disappear. Only when a someone needs to convert their digital assets to fiat, do all the regulations and compliance kick in.
The cryptocurrency industry is well over a decade old with more than 5,500 different cryptocurrencies and a market capitalization north of $350 billion. Since Bitcoin’s birth over a decade ago, cryptocurrencies have challenged the financial mainstream and disrupted hundreds of years of state-level monetary policy.
In the fall of 2020, we are living in a new world that no one could have predicted. Millions of people are getting into the crypto market, looking for answers that governments can no longer provide. We are facing a global pandemic, massive protests, job automation, environmental issues and geopolitical tensions Stablecoins and Defi have removed the dependencies on centralized systems and are shifting power to the masses. Anyone can write a Defi smart contract and effectively create their own mini-Wall Street. Stablecoins make it simple to get in and out of crypto, just like using an ATM. For the first time in centuries, we have the opportunity to press the reset button on the financial system. And the WEF can help us create the right frameworks that deliver on crypto’s decentralized promise and at the same time build credibility and drive mass adoption.
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