Money 20/20 reopened: enter the crypto space

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Money 20/20 has done it again – it brought together payment enthusiasts from around the world (with attendees from 76 countries) to talk about payments, financial services and the technologies that make the world faster, more transparent and inclusive.

The highlight of the event was the keyword #conversation, and what struck me was the need for players in the payments industry to come together, physically, share laughs and sign off. new partnerships that consolidate this space and equip it for the future of money. . This current edition marked my third time participating in Money 20/20, and if in the past there had been a lot of buzz around the word competition – banking vs fintechs, fintechs vs other fintechs aiming for a bigger slice of the pie, this is year I noticed it was about collaboration and the urgency of developing new payment rails based on open architecture and supporting the use and adoption of crypto.

In keeping with the emergence of new technologies and customer expectations, we all agree that money changes. For example:

Maria, 7, Romania, naturally reading (like a classic Little Red Riding Hood story) about the birth of Bitcoin from a drawing book (thanks Bitstamp for the gift): ‘ Satoshi Nakamoto, whose true identity is still a secret, created the first official Bitcoin cryptocurrency. ‘

OpenPayd employee, 21, UK: ‘can I have my monthly salary in crypto’ (thanks Iana Dimitrova, CEO of OpenPayd for sharing this example during your Money 20/20 panel).

Young people demand integrated, fast and fun financial solutions, and we must be prepared to meet their needs. They do not think of the money per se, but of the experience that it affords. Since Gen Z and Generation Alpha, financial products have become a way to boost your composure among your peers (they like to experiment with new forms of money – tokens, eye-catching designs for cards and apps), while also stirring your curiosity for try ordinary stuff. Let us not forget either the Millennials, often very involved in financial problems, showing an interest in investing in housing, savings and travel, and sometimes wary of traditional financial services / intermediaries following the 2008 financial crisis. .

Are traditional financial institutions ready to serve them? Some have already started to show a real interest in the efficiency and improvements that cryptocurrencies can offer, to enable these generational experiences.

The message some industry experts have sent to Money 20/20 is clear: if we don’t use the services they are currently offered by many blockchain-based financial services companies, consumers will never have a cheaper, more inclusive solution and diverse experience. In addition, they will never have the transparency and security of their data and control over their money, as they do with blockchain-enabled financial products. Let’s see what these products are.

Creating Products You Can’t Imagine – Crypto Explained

Bitcoin first entered the scene in 2008, when a pseudonymous software developer, Satoshi Nakamoto, proposed it as an electronic payment system based on mathematical proof. At first, Bitcoin was seen as a digital payment method that did not require users to hand over credentials every time they used it. It was equivalent to a universal currency which does not have to be exchanged at all borders; and ensured the fairness of a currency that even the world’s poorest people can keep in a digital account without paying high fees, rather than relying on cash. In addition, it promised the convenience of a payment system that allows online services to change small amounts of money.

In a funny letter to his mother, an IMF economist explains to him the central bank digital currency (CBDC): “The money you spend in the market could one day be replaced by a digital currency from the central bank. Think of it as a form of digital money that you can keep on your phone, in an app called a digital wallet, much like the one we use to send us messages. You can transfer money there from your bank account or just keep the balances you receive from other people. Instead of sending you a picture over the phone, I could send you the euros I haven’t spent. ‘

A stablecoin is a type of cryptocurrency whose value is pegged to another asset class, such as fiat currency, such as the US dollar or gold, to stabilize its price. Usually, this is money issued by the private sector (as opposed to CBDCs which are money issued by the public). Compared to currencies issued by countries, stable coin transactions are available 24 hours a day, seven days a week, anywhere in the world – without depending on banks. Initially, stablecoins were used to buy other cryptos, like Bitcoin, as many cryptocurrency exchanges did not have access to traditional banking services.

NFTs are unique tokenized representations of digital files that are traded on public blockchains. These are issued on a blockchain and are used to denote ownership of a certain asset. Each NFT is linked to unique data, usually some digital content file of some sort and governed by a smart contract. According to Visa’s NT white paper, the process of converting a media file to a non-fungible token is called “typing” an NFT. NFTs are not fungible, which means that each NFT is unique and not interchangeable with another NFT. The interesting fact about NFTs is that for the first time, content on the Internet in the form of an NFT can be permanently owned by a specific person who is independent of a centralized intermediary. At the end of the summer, Visa purchased a non-fungible CryptoPunk token to have first-hand experience of the process, while also aiming to help businesses understand the potential of NFTs to engage fans and build loyalty.

Decentralized Finance or DeFi is a concept. DeFi aims to eliminate the need to trust centralized parties and thereby make digital services open, democratic and unlicensed. Most of the operations in DeFi are done by smart contracts, which are stored on a blockchain and cannot be tampered with after deployment. This approach reduces transaction costs while providing high levels of security and privacy. DeFi is well suited to emerging economies and countries with limited access to traditional financial services, providing access to credit, trade and investment opportunities. (To learn more about DeFi app categories, risks, and benefits, see our BCG educational article on DeFi here.)

Defining a new distribution – when traditional finance and crypto collide

The concepts we have briefly explored are the most popular. There are other initiatives in this space (tokens, digital assets, programmable money, etc.), as well as variations (retail CBDC, wholesale CBDC, etc.), which highlight the fact that blockchain technology and crypto -currencies began to transform the future (of finance). Now, not only old technology providers and traditional banks have started to explore digital assets, but also neobanks have started to take an interest in crypto; and while they figure out how to credibly enter it, many are looking for a trustworthy partner. And events like Money 20/20 are the right place to do it.

This is what I learned from some insightful and inspiring discussions I had at the event with Bitstamp, Zumo Money, Mercuryo, Fireblocks, Copper, Crystal Blockchain, Chainanalysis, Coinfirm, Crypto.com, for n to name a few. These guys know their business because many of them have a traditional banking background, most of the time they offer a blockchain-based ecosystem that includes products that look like traditional financial services – seamlessly integrated into the apps they tackle. strategically and integrate risk into their products, see blockchain / data usage as business accelerators, and are ready to cooperate and grow as a community.

During these three days, I also learned that they suffer from one problem: the market is very fragmented when it comes to crypto and payment regulations. The current situation we find ourselves in today is at an inflection point because we are moving from analog to digital activity, which is creating new kinds of power and risk. Many crypto companies have been started simply by having a traditional investment services license or an EMI license that was used to meet fiduciary expenses in the crypto industry. Yet regulators around the world have started to catch up with technology and are taking an independent approach to technology regulation. Countries like Singapore, Germany, Switzerland, United Kingdom, United States, Estonia, Malta are quite advanced in this space.

Conclusion

The financial industry is dynamic; fueled by politics, technology, economies, people, geographies, the environment. With everything we’ve been through lately: COVID-19, the digitization of payments, the trade war between China and the United States, sovereignty and the willingness of states to keep control of their payment rails (in avoiding centralized systems), significant technological advances. (blockchain, DTL, quantum computing), it is high time to design new payment systems. Open, transparent systems, built with risk management and security rules, which eliminate intermediaries and redundancies, costs and improve the well-being of people. Some are betting big on crypto and blockchain technology. Time will tell, but this is certainly an important page in the history of money, marking a new era in finance.

There were three days full of positive energy and productive meetings at RAI in Amsterdam. We thank the Money 20/20 team for hosting us and their courage in organizing such a complex event, given the current circumstances. And to you, our reader. Finally, I will conclude by quoting Jack Dorsey, CEO of Square “you should come to Money20 / 20 to meet new people and find those who think differently about what you are looking for”.

About Mirela Ciobanu

Mirela Ciobanu is Editor-in-Chief at The Paypers and has been actively involved in writing industry reports, conducting interviews and writing articles on innovation in payments and fintech. She is passionate about finding the latest news on AI, Crypto, Blockchain, DeFi and she is an active advocate for the need to protect our data / online presence. Mirela holds a bachelor’s degree in English language and a master’s degree in marketing. She can be contacted at [email protected] or via LinkedIn.

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