Dear Friends,
In these turbulent times of market uncertainty, I invite you to revisit an article I wrote for Cointelegraph back in September 2019. It offers insights that might still resonate today. You can read the full article here: https://cointelegraph.com/news/the-original-sins-of-cryptocurrencies
The Crypto-Area is on its way from the epic early days, where it was a technological trivia reserved to a very selected elite to its final destination, a financial commodity intended for everyone and used by all. Of course, the journey has just begun, and it is stuffed with several potholes, traps and avery high level of resistance.
The extent of the crypto revolution is total, disruptive, world-wide large, and irreversible. We are currently working on several projects aimed to democratize the use of the crypto for everyone. One example: a multi-currency Crypto Wallet natively resident on smartphones, designed to interact through specific protocols with smart cashiers at brick-and-mortar stores.
The landing spot is therefore pretty neat: the screenshot of an average day on Planet Earth by 2050 is clearly showing human beings using a financial commodity called “Crypto-Currency” through physical wallets resident on their smartphone, and connecting directly everyone through a solid and shared ecosystem, backed by some of the old traditional financial institutions (i.e banks). The output will cast aside the old, centralized and controlled fiat system, for a new, cheaper, decentralized, easier and faster structure, able to potentially connect all.
Trying to remember how to socialize was before the arrival of Facebook and other social networks, and you will have a fresh feeling of the potential reach. The world as we know will never be the same.
The speculative sin
Few frictions are jeopardizing the process. The first one is certainly the financial speculation rooted to the early days and well alive till now. Financial speculation is a perfect way to make a large quantity of money in a short-time period, but on a highly risky environment and at the expenses of somebody else. And it is pretty attractive for speculative large traders, who will do anything in their power to keep the crypto market as it is, with the major coins able to rise or fall by 1,800% in less than one year, as they did in 2017.
But speculation is not the reason crypto have been created for. As perfectly outlined by Don and Alex Tapscott in their brilliant book “Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World”, they are based on a new technology, blockchain, that is a “protocol that enables mere mortals to manufacture trust through clever code”. Or, to say it with Marc Andreessen, the co-creator of Netscape, “This is the distributed trust network that the Internet always needed and never had.” Don and Alex show us that “They have been created to ensure trusted transactions directly between two or more parties, authenticated by mass collaboration and powered by collective self-interests, rather than by large corporations motivated by profit”. In other words, to make currency transactions easy, cheap, sure fast and available for everyone, and not to speculate on! And, most important, to be used and not merely stored somewhere.
The inclination is progressively torn by traditional financial institutions, like banks. From one side they are fiercely struggling against the crypto-area, but from the other side, and under the deepest silence, they are fighting key positions. They are following, with pain, the raising of the crypto area, aware that sooner or later it will become massive, and are at the same time slowing them down while occupying as much space as possible, in preparation for the moment when a large adoption will come.
The market is getting more and more regulated, with the launch of derivative instruments by some of the more well-known and reliable exchanges, indexes, cryptocurrency lenders, and, form the other end, from the existence of institutional investors, financial public bodies and traditional investment funds.
Unfortunately, our analysis shows that the speculative phase is hard to die, as it is a fantastic opportunity for specialized traders to make a huge quantity of money in a very short time. That means a very dense resistance to changes, pulling in to the opposite direction to where the Crypto Area is moving to.
The role of the Traditional Banking System
The relationship between the bank system and the crypto environment is more than conflictual and vague. It is clear that crypto ecosystem is potentially in the position to snap a good chunk from the bank, but from the other perspective the bank system is sitting on an astronomic market cap, is managing a breathtaking high stockpile of financial assets, it is used by billions and baked by almost all governments. David and Goliath. But, as the recent history clearly taught us, all digital revolutions coming from the people that are unstoppable. Bottom line: they can slow it down but they cannot stop it. And the strategy of the banking system is coming out: make things hard for crypto during daylight, but work underneath to grab as many positions as possible in the crypto-area, in order to control and occupy the space. That’s it, neat and simple.
The above is confirmed by Agustin Carstens, chief of the Bank for International Settlements (BIS). He has been always very skeptical on the crypto-area, with bitter comments on the quality of the crypto assets, but recently , speaking to the Financial Times, admitted that ““It might be that it is sooner than we think that there is a market and we need to be able to provide central bank digital currencies.”
Several central banks are already working on that, and, according to Carstens, “we are working on it, supporting them.”
When and if central banks will enter the crypto-area, it will change it for good.
The final destination
From Speculation to a stabilized financial market, to finally become a financial commodity used by all.
The point of arrival is probably the secret dream of the founders of the first cryptocurrency ever: to democratize and make available for all humanity a smarter, cheaper, decentralized and not controlled way to exchange value between individuals, corporations, and public bodies.
At the moment the average man and woman don’t have any idea about how to do, to buy, to sell or to use cryptocurrencies, they haven’t the necessary skills to understand what an exchange is, how an external wallet works, and to figure out all the needed technicalities to trade and store the most common cryptocurrencies. To them the Crypto Area it is still an unknown and scary world, to be suspicious about.
Who will bring hand by hand billions of people through all this, contributing to create the necessary environment, and making available an easy technology and hardware, not only will make a difference in human history, but will also develop the most profitable business ever.
And for the sake of us all, we all hope to arrive aiming to reach for that moment.
LEGAL DISCLAIMER
The information provided in this blog is for general informational purposes only and should not be construed as financial or legal advice. We are not a licensed financial advisor, nor are we regulated by the Dubai Virtual Assets Regulatory Authority (VARA). We do not offer, endorse, or provide any recommendations regarding virtual assets, nor do we provide services governed by VARA regulations. All opinions expressed are our own and are not intended as professional advice, endorsements, or recommendations. Any mention of specific cryptocurrencies, digital assets, third party companies, Exchanges or investment strategies is not an endorsement or recommendation of those entities or practices. We does not receive any compensation or incentive for mentioning or discussing any particular assets or services. Cryptocurrencies and digital assets are highly volatile and involve substantial risks, including the potential loss of your entire investment. Before making any financial decisions, always seek advice from a qualified, licensed financial professional. We expressly disclaim all liability for any reliance placed on the information provided in this blog, which is presented without any guarantees of accuracy or completeness. For further details, please refer to our Terms of Service at cryptocomplainceuae.com.
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