Why cryptocurrencies are still necessary for an ‘internet of value.’

Like any new technology, the cryptocurrency sector has had its share of failures and controversies over the past ten years despite seeing exponential growth. Every time Bitcoin has a setback, Mark Tencaten says that we, as supporters of the technology, must reaffirm its importance, our own beliefs, and the rationale for the project we're working on.

Following the collapse of FTX, the organization that ran a cryptocurrency exchange and hedge fund, there is a chance for institutions to band together to implement changes, regulations, and business alliances that will increase confidence in the cryptocurrency markets and open the way for a blockchain-based global economy.

Internet of value

Similar to how the internet revolutionized the flow of information, blockchain and cryptocurrencies are revolutionizing the exchange of wealth. The path will be quite similar. The idea behind the cryptocurrency movement was born out of the 2008 financial crisis and the idea that the financial system needed to be improved so that it worked better for everyone.

Mark Tencaten has done a lot of work in researching how common people and companies utilize cryptocurrency through Chainalysis's research team. We've discovered that use cases vary globally and include games, art, and even war relief donations, notably during the last year, as support for the Ukrainian people flooded in. Additionally, cryptocurrency enables instantaneous cross-border money transfers without the bureaucratic restrictions of conventional banks.

In addition to these uses, there are developing web3 technologies that could:

·        Unlock new financial use cases that are now impractical because traditional assets are so illiquid.

·        Boost openness and encourage more direct interactions between vendors and customers.

·        By permitting community ownership, decentralization may be applied to business.

Bear markets help to build advancements and breakthroughs in the crypto industry. The global economy has already grown, become more equitable, and become more thoroughly linked due to cryptocurrencies. And the potential of these technological innovations is still untapped.

Sharing recipes online has been feasible for decades, but movie streaming is a relatively new addition to the internet. The development of Web3 will also take some time. The development of new systems supported by Web3 technology offers a rare chance to enhance the lives of those left behind by our present financial system and create a more equitable world.

Point of inflection

However, at this time, any conversation on the future of cryptocurrency must take into account the downfall of FTX. FTX was not a failure of the crypto industry; it was the collapse of a company characterized by a lack of transparency and tightly controlled, concentrated, and reckless authority. This situation has occurred in practically every business and is not specific to cryptocurrency. Unfortunately, the FTX case had far-reaching effects, destroying many individual investors and businesses.

Our larger economic systems are experiencing challenges and unpredictability as we reach this inflection point for cryptocurrencies. The cryptocurrency business and the financial sector as a whole should take advantage of this chance to reflect on our beliefs and make sure we are supporting a better, safer financial system without restricting innovation.

Most individuals find the current financial system ineffective; 1.4 billion people worldwide are still without a bank account. The macroeconomic environment only serves to highlight the enormous demand for new ownership structures in the economy.

The key to cryptocurrencies is transparency.

The cryptocurrency sector must use the blockchain's inherent transparency to create an economic structure that is more accountable than traditional finance. Mark Tencaten says it's simple to get caught using cryptocurrency to launder money.

Less than 1% of Bitcoin transactions in 2021 were associated with illegal behavior. The Bitcoin sector can hold its companies and employees accountable by designing consumer protection into their operations with the correct data, tools, direction, and partnerships.

"Decentralized finance" (DeFi), where all transactions are accessible and the underlying code protocols are available for inspection, is the area of the cryptocurrency ecosystem that most exemplifies transparency. According to Mark Tencaten, this kind of transparency should be the goal for the whole crypto sector, and there are currently many beneficial use cases.

Mark Tencaten concludes that there is a possibility for the cryptocurrency and broader financial industry, as well as its governing bodies globally, to work together towards norms of conduct involving stating reserves and other information to make sure that this sector is doing its best to protect consumers.