Crypto is back from the dead

[ad_1]

As a long-time keen observer of the crypto economy, I have always been perplexed by the multiple gleeful proclamations of the death of Bitcoins in major media and financial news outlets. This has happened 473 times since bitcoin became a thing in 2010. There is actually a site that tracks these so-called obituaries, which I wrote a while ago during a previous crisis .

It’s a longer list now, after a long dark winter.

Not only is Bitcoin not dead, but it and the biggest crypto economy are more robust than they have ever been, with several new crypto-fueled innovation sectors singing at the top of their voices despite efforts. increasingly desperate US lawmakers and regulators, led by Senator Elizabeth Warren, to eradicate it.

I have pointed out before, usually on deaf ears, that the price of a particular cryptocurrency is perhaps the least interesting thing about this technology. It just represents the fear and greed of investors who, on the whole, care no less about how it all works and why it facilitates something never before available to humans, the prospect of totally elusive and secure property of, well, anything.

Still, I guess by this public market value perception metric, crypto has performed surprisingly well over the past two months, certainly better than stocks, bonds, commodities, real estate, or anything else than we could mention.

Here, of [email protected] is a vivid picture of where you would have been best placed to invest your money over the past 12 years.

#bitcoin price history pic.twitter.com/yPs3HEDQpk

ChartsBTC (@ChartsBtc) January 21, 2023

Hong Kong adapts to crypto

But moving away from watching the numbers, some critically important things have happened to bring crypto back to rough health.

The first is that while the United States has played the mole with every crypto initiative, other jurisdictions have made a quick and determined decision to be more welcoming. Surprising ones, like Hong Kong, which proposed a licensing regime for crypto exchanges and a broader proposal to allow fiat ons and offs for retail investors. Hong Kong is essentially China, which abruptly wiped crypto from its shores last year. It looks like they’ve reconsidered. A total of $1.3 trillion is sitting in the crypto markets right now, and while that doesn’t seem to matter to US regulators, it surely played a role in China’s about-face.

And of course there is the warm welcome from Dubai, Switzerland, El Salvador, the Netherlands, Singapore, Estonia, Portugal and a number of other countries that guide rational, non-adversarial regulation in their legislative halls, which are eager to take a piece of what the United States is angrily trying to expel.

And then there’s Shanghai’s upgrade to the world’s second-largest blockchain, Ethereum, which last week completed flawlessly and in real time the final stage of its journey from energy-inefficient proof-of-work to highly energy efficient proof of stake. consensus mechanism. This remarkable technical achievement and the next stage of Ethereums upgrade (which will address scalability and throughput constraints) has skyrocketed confidence in the pursuit of crypto innovation, as evidenced by crypto conversations. and trading volume over the past week.

But wait, there’s more.

The magic of blockchain

A new corner of crypto, unimaginatively dubbed RWA, which I have written about before, is exploding and is poised to completely disrupt the world of high finance and the physical assets it fuels. In short, RWA is the application of blockchain magic to the issuance, distribution and financing of traditional and well-understood real-world assets, private debt, real estate, securitization of equity, trade finance, debt instruments, etc.

The underlying magic enabling this is called tokenization, which describes the mathematical cargo that is carried on the blockchain, which is now fully embraced and operated by Goldman Sachs, JPMorgan Chase, the Monetary Authority of Singapore, Deutsche Bank and others. others as they burst out of the gates to claim a piece of what is expected to be a $16 trillion industry by 2030 (according to a BCG study), or 10% of global GDP. And that from a standing start of essentially zero.

An example? Earlier this year, from the aforementioned recently crypto-friendly Hong Kong government: The Government of the Hong Kong Special Administrative Region of the People’s Republic of China (the Hong Kong SAR Government) announced today ( February 16) the successful bid for 800 million Hong Kong dollars ($100 million). ) tokenized green bond (the Tokenized Green Bond) under the Government Green Bond Program (GGBP). It is the first symbolic green bond issued by a government in the world.

We could talk about the maturation of NFTs far beyond graphic images into ticketing and vibrant social clubs and supply chains and real estate rentals. Or even the much-maligned metaverse, now about to burst into flames again as new AI projects like ChatGPT inject their ability to evoke novelty into otherwise static online graphical environments.

Oh, and zero-knowledge proofs, which I’ve talked about before, which have just begun their cryptographic journey, a piece of cryptographic and mathematical magic that allows statements to be certified true without having to present any proof of being so. .

About those skeptics

But still, there will be many whose skepticism will remain unshakable, and who will ignore all these green shoots now turning into veritable flora. Maybe it’s because they read the headlines written by those who are misinformed or just pissed off about the whole crypto effort (a position I feel a skosh of empathy with).

For these people, readers and commentators, crypto will always be dying, almost dead, overnight. Until they wake up one morning and he’s everywhere, embedded in the fabric of, well, everything. DM

Steven Boykey Sidley is Professor of Practice at JBS, University of Johannesburg

[ad_2]