The crypto industry is on its way from the epic early days,
when it was a technological phenomenon exclusive to a limited group of
techs, scientists and enthusiasts, to its final destination: a financial
commodity intended for use by everyone. Of course, the journey has just
begun, and it is riddled with potholes, traps and a high level of
resistance.
The extent of the crypto revolution
is total, disruptive, world-wide and irreversible. But its final
destination is pretty neat: a screenshot of an average day on planet
Earth by 2050 shows clearly showing human beings using a financial
commodity called “cryptocurrency” through physical wallets residing on
their smartphones and connecting everyone directly through a solid and
shared ecosystem that is backed by 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 everyone.
Try
to remember how socializing was before the arrival of Facebook and
other social networks, and you will have a fresh feeling of crypto’s
potential reach. The world as we know it will never be the same.
The speculative sin
A few frictions are lagging crypto’s mass adoption process. The first one is certainly the financial speculation
rooted to the early days and still thriving to this day. Financial
speculation is an ideal way to make a large quantity of money in a short
period of time, but in a high-risk environment and at the expense of
somebody else. It remains an attractive option for speculative large
traders, who will do anything in their power to maintain the crypto
market’s current conditions, with major coins able to rise or fall by
1,800% in less than one year, as they did in 2017 when the leading
cryptocurrency’s price hit record highs at around $20,000 per coin.
But
speculation is not the reason for which crypto was created. As
perfectly outlined by Marc Andreessen, co-creator of two of the
internet’s first browsers, Mosaic and Netscape, who outlined:
“This is the distributed trust network that the Internet always needed
and never had.” Or, to say it like Don and Alex Tapscott in their
brilliant book,
“Blockchain Revolution: How the Technology Behind Bitcoin Is Changing
Money, Business, and the World,” cryptocurrencies are based on a new
technology — blockchain — that is a “protocol that enables mere mortals
to manufacture trust through clever code.” Don and Alex write:
“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, crypto is
intended to make currency transactions easy, cheap, sure, fast and
available for everyone — and not to speculate on! And, most importantly,
to be used and not merely stored somewhere.
Traditional and crypto financial markets
The
inclination is progressively torn by traditional financial institutions
like banks. From one side, they are fiercely struggling against the
crypto world, but from the other side, and under the deepest silence,
they are fighting key positions. They are painfully following the era of
crypto, aware that sooner or later it will become massive, yet slowing
it down while occupying as much space in the industry as possible in
preparation for the moment when large adoption comes about.
Related: What Does Mass Adoption Mean Relating to Crypto? Experts Answer
The market is becoming increasingly regulated, with the launch of derivative instruments
by some of the more well-known and reliable exchanges, indexes and
cryptocurrency lenders, while from the other end, institutional
investors, financial public bodies and traditional investment funds are
coming out of the woodwork.
Unfortunately, my 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 the opposite direction to where the crypto area is moving.
The role of the traditional banking system
The relationship between the bank system and the crypto environment is vague and heavy with conflict. The crypto ecosystem is potentially in a position to snap a good chunk from the bank. But from another perspective, the bank system is sitting on an astronomic market cap,
is managing a breathtakingly high stockpile of financial assets, and is
used by billions and backed by almost all governments. It’s a David and
Goliath story.
As the recent history of Bitcoin (BTC)
invention has clearly taught us, all digital revolutions coming from
the people are unstoppable. Bottom line: the powers that be 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 under
the surface at night to grab as many positions as possible in the crypto
area in order to control and occupy the space.
The final destination
From
financial speculation to a stabilized financial market to finally
becoming 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 provide humanity access to a smarter, cheaper,
decentralized and not-controlled means to exchange value between
individuals, corporations and public bodies.
As a recent survey shows,
the average person at present doesn’t have any idea how to buy, sell or
use cryptocurrencies. The majority of people don’t have the necessary
skills to understand what an exchange is, how an external wallet works,
or how to figure out all the needed technicalities to trade and store
the most common cryptocurrencies. To them, the crypto area is still an
unknown and scary world to be suspicious about.
Whoever
will guide, hand-in-hand, billions of people through all of this —
contributing to create the necessary environment and making the needed
technology and hardware accessible — will not only make a true mark in
human history, but will also develop the most profitable business in the
world of all time.
