Encryption will remain key technology, WEF says

The WEF pointed out that 2022 will be a bad year for cryptocurrencies, with more than $2 trillion in the main speculative market value evaporated.

The World Economic Forum (WEF) predicts that the adoption of cryptocurrencies will become an important part of the digital financial system, but warns that 2023 will not be better.

The World Economic Forum, a global non-governmental foundation, said in a blog that the heavy participation of traditional banking institutions such as JPMorgan Chase will help the encryption industry mature, predicting that cryptocurrencies will enter the digital financial system. Looking ahead, the cryptocurrency industry is expected to see a strong rebound this year as new regulations come into effect, making the cryptocurrency space safer.

The World Economic Forum blamed regulators for failing to prevent the collapse of many crypto businesses that led to the crypto winter phase. The report pointed out that the current bear market situation in the cryptocurrency market is very similar to the dotcom bubble, and it will definitely bring a new phase to this innovative market with established institutional players.

The forum believes that 2022 will be a catastrophic year for the cryptocurrency industry, which can lead to the growth and recovery of the ecosystem. A blog written by Dante Disparte, chief strategy officer and head of global policy at circle internet financial, explains that while the recent downfall of FTX and the demise of the Terra blockchain impacted millions of consumers in 2022 – the market lost $2 trillion That period — that doesn’t change the core of these technologies, which are currently being tested by financial institutions around the world.

While the underlying technologies of cryptography and blockchain can be generalized to all industries and coordinate activities (collectively known as the building blocks of Web3), core experiments in areas such as financial services continue, Disparte said.

Disparte cited JPMorgan Chase as an example of a company that was openly opposed to cryptocurrencies and blockchain, turning to adopting the technology in several of its experimental products and offering cryptocurrencies to select clients.

For the World Economic Forum, the best course of action to perpetuate cryptocurrencies and blockchains is to “eliminate the dangers of the technology, like all tools, by putting them in the hands of responsible actors and encouraging their responsible use.” Harmful effect.”

Disparte believes that cryptocurrencies are still the protagonists of the financial world regardless, and while regulation is indeed necessary, countries that can provide regulation while maintaining a competitive approach will shape the future of the industry. Disparte asserted that these technologies will continue to be implemented despite what he sees as the great harm caused by their irresponsible use.

The WEF pointed out that 2022 will be a bad year for cryptocurrencies, with more than $2 trillion in the main speculative market value evaporated.

“Millions of consumers and businesses have suffered losses, but perhaps even more damaging to the nascent industry and technology is the erosion of fundamental trust in the promise of crypto finance, which was supposed to be the answer to many of the causes that led to the 2008 financial crisis. Correction of wrongdoing. Financial crisis. That trust is now eroding.”

“At the same time, policymakers have been sounding the alarm about the excessive risks of cryptocurrencies while failing to enact sound regulation, as evidenced by not one but multiple massive failures,” Disparte wrote.

According to the blog, the dot-com bust in the early 2000s left the future of the World Wide Web and the Internet in the hands of more enduring companies. Likewise, perhaps 2022 will mark the transition of crypto and blockchain infrastructure now into more stable hands.

Indeed, as a test of the staying power of digital assets and blockchain at the heart of financial services (and the rest of the global economy), watch what the big banks and established financial services firms do, not what they say, ’ wrote Disparte.

“This is the regulatory and policy conundrum posed by the epic cryptocurrency failure of 2022. Countries that enable responsible competition will shape the future. Cryptography and blockchain will continue to be an integral part of the modern economic toolkit, Although these tools can cause enormous harm when used by the wrong people,” the blog said.

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