December 2017, I am at my desk when I get the alert that bitcoin has hit $19k+. After buying a fraction of some a couple of months before when it was at $7k, I am unsurprisingly ecstatic about this news and I try to contain my excitement as I go to log into my bitcoin wallet to sell some and make a small profit. But it seems that I am not the only one executing this strategy. Unprecedented volumes of user activity means that I am not able to log in, and after a couple of hours of waiting, I finally gain access but to my disappointment, the price has fallen significantly.
This coupled with countless reports of people getting scammed by ICOs, consumers ending up in huge debts to finance their new crypto portfolios, and of course the shocking lack of regulatory safety nets, have all the hallmarks of a financial investment product that is anything but grown up.
Yet, for all its faults, and in spite of my own personal set of losses incurred by my amateur dabbling (partly fuelled by wanting to understand it better as a PR consultant within the Fintech space, and partly by wanting to jump on the bandwagon), I can’t help but still look at cryptocurrencies with a sense of wonder.
In this age of growing distrust on a global scale towards financial institutions and the like, the fundamental concept behind cryptocurrencies (and indeed the unassuming but arguably real star of the show, blockchain technology) provides the world with a new option with which to circumnavigate its distrust of large, centralised bodies. Now I don’t mean that the middle man will simply disappear. Whilst this may have been the initial intention of bitcoin, this is unlikely as the mainstream adoption of it will ultimately be in large part due to the advocacy and support of the financial industry big bodies. However, the wider benefits of cryptocurrency and blockchain which include lower costs, better efficiency, improved regulatory access, and limited susceptibility to human error, can help pave the way to instilling trust back into those institutions holding the power.
How is this best used to our advantage though? While crypto’s notoriety is derived from its past potential to make investors a quick buck (some more successfully than others), it would be a mistake to not look at the bigger picture and behold some of its other incredible use cases that have taken the world by storm. For example with humanitarian aid where it can help ensure that desperately-needed funding gets to where it is supposed to, cross-border remittance (particularly in third world countries, sending money abroad can be expensive, time-consuming and prone to error) where bitcoin and other cryptocurrencies have provided people with a faster, cheaper and more trustworthy alternative. It also has the additional benefit of offsetting against inflation and hyperinflation in countries such as Venezuela where a number of locals have been reported to hold their money in bitcoin to safeguard their wealth.
Further to this, the digitisation of assets more broadly is growing in popularity, with ever-increasing use cases popping up for it everywhere. Some of the real-world examples I have come across that could make hugely positive change include providing otherwise “officially unidentified” individuals with a digital identity and allowing them simple rights like voting or access to banking, or enhancing land registry processes in countries where the lines are blurred with regards to property ownership, or the provision of proof of authenticity in items such as diamonds or artwork, or even creating greater corporate transparency within companies enabling them to spot discrepancies or wrongdoings in a business far sooner than they would have done previously… and so many more!
Perhaps the crypto that first captured my attention back in December 2017 is a thing of the past, but I find it hard to believe that a concept with such huge potential for tangible change, innovation and opportunity can just be cast aside and forgotten about. The rise of institutional investors, regulators finding the balance between necessary intervention to protect consumers whilst also recognising the benefits and focusing on its potential, and the adoption by the large financial institutions, all provide us with solid arguments as to why crypto and particularly blockchain has not yet had its day… this is just the beginning.
Panel discussion – ‘Crypto 2.0: is crypto finally getting real?’ – Wednesday 27 March at Lansons. E-mail email@example.com to attend.
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