Cryptocurrencies and blockchain will reshape our financial future

Journalist Patrick J O Brien explains how cryptocurrencies are here to stay and how governments and regulators need to adapt quickly

Exante CEO Alexey Kirienko and Anatoliy Knyazev, global pioneers in cryptocurrency
Exante CEO Alexey Kirienko and Anatoliy Knyazev, global pioneers in cryptocurrency

While this may just sound like dull news one might find in a financial newspaper, its implications for everyday people are major.

With blockchain, things as mundane as medical records, identity documents and even qualifications and credentials could be stored and verified easily, scrapping a lot of the day-to-day grind of dealing with the bureaucratic systems of modern life, and allowing employers to make sure that a person’s CV, for instance, is not merely a fanciful story tailored to get a job.

Due to cryptocurrencies being used as decentralised tokens to execute transactions on blockchain, and considering governments and corporations are partnering with these blockchain developers who provide a service, investors see value in buying up other cryptocurrencies.

Unlike bitcoin, blockchain as a service that is directly applicable to our everyday lives is unlikely to simply collapse, especially considering its adoption by big players who clearly see a future for the technology.

Investing in cryptocurrencies that form part of a service ecosystem, rather than solely offering ethereal tokens that have no real, fundamental value, could prove to be the new stocks and shares, as blockchains move from being perceived as “just a fad” to a mainstream technology we all rely on in our day-to-day lives.

Cryptocurrency is a disruptor to the banking industry that should be taken seriously. When people like International Monetary Fund managing director, Christine Lagarde, say cryptocurrencies could displace central banks and international banking, that’s very significant. The lack of intermediaries and oversight in cryptocurrency, which operates on peer-to-peer transactions, makes it remarkably attractive for investors, who can cut out fees for banks and financial advisers.

Central banks around the world are beginning to come together to discuss and agree on how fiat currency (digital currency that is recognised and forced into circulation by a government as opposed to bitcoin which does not have to be accepted by the receiving party) is being represented.

They also are experimenting how they can change and dictate banking policies. Countries such as Singapore have experimented with prototype solutions, such as the Project Ubin, that could digitise Singaporean dollars into the market. However, it’s going to take time. The rate and speed of adoption is crucial though.

Over the past year, these banks have publicly talked about how they see value in representing cash on leger in terms of ability to access cash for the general population, or the ability to ensure there is enough liquidity in the market when a recession strikes. The cryptocurrency market, which trades various digital-based coins, can look exciting, scary, and mysterious all at once to the casual observer.

Its pioneer, Bitcoin, dramatically surged in value and steeply dropped (before picking back up) in recent months. ICOs (initial coin offerings for new cryptocurrencies), meanwhile, are emerging at a head-spinning rate. While some financial advisers remain skeptical, it’s hard to ignore the massive amount of money invested in the field.

For instance, if implemented in government operations, blockchain will help break down barriers built from bureaucracy and corruption by providing a means to bypass existing power structures. It could be used to transform the way charities are created and regulated. By implementing a transparent system of transactions that includes deposits of cash, transfers of donation and expenses spending will bring about a paradigm shift on how rules are enforced for these organisations.

Moreover, this technology has the competence to revamp the present system by automating manual processes, eradicating frauds and controlling the issues for authorisation. Its implementation across diverse sectors can be a solution to the most foundational problems of mankind. Hence, blockchain could be the perfect platform to transform a knowledge-driven economy into a digital-inclusive society.

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