Cryptocurrencies, a technological antidote to economic uncertainty

Changpeng Zhao

Updated:04/29/2020 01:55 h

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The digital revolution has completely reinvented the structures on which society was based not so long ago. Hyperconnectivity, globalization and the appearance of infinity of new tools has also been a before and after in the economy.

From the simplest and most utilitarian levels for the large population as a whole, such as the digitization of banking services to, ultimately, the stimulation of alternative financial assets compared to traditional money, such as cryptocurrencies. This new framework has opened increasingly innovative and accessible markets, on which progress is made and innovates with notable impact.

From the investor’s perspective, it is undeniable that the range of opportunities presented to him at this time is very wide, which benefits a more plural market. The digital revolution leads to economic growth since, it has brought with it a greater and varied offer that is linked to the improvement of productivity and this, ultimately ends up having an impact on investments.

An upward trend also in Spain. According to a study published by ING in 2018, more than 60% of respondents have heard of cryptocurrencies at some time and more than 30% say they intend to invest in this new market. This opening of new opportunities focused on digitization and the technological revolution also resides in the elimination of intermediaries thanks to blockchain technology, which democratizes any transaction process. A circumstance that is still viewed with mistrust by large banks, which in turn show some fear of being left behind in this process.

And it is that the true revolution comes from the hand of this «blockchain» technology, which will allow – in addition to creating a new banking model – for example, to change the energy sector in which everyone can generate their energy and sell it to the market, or in public administrations, digitize the vote and create participatory processes. Its encryption and security capacity is a key and determining factor.

Although not only this circumstance is raising the relevance of the “crypts”. Moments of crisis and uncertainty derived from the Covid-19 pandemic also reinforce the commitment to these new assets. Now when technology is most important for society to advance, the Financial Stability Council is also pointing in that direction and has issued recommendations on stablecoins, to carry out proper supervision in view of the momentum of these assets at the moment.

The future is moving in that direction. The consolidation of technology will favor the increase of investments and alternative markets. However, it is necessary to work in parallel from the administrations to create a regulatory framework that delimits and clearly sets out the rules. That will be the solution for society to stop seeing it as volatile finances and thus position them as a reference in investment activity. Technology brings new opportunities and demonstrates its potential. The regulatory framework will provide the necessary security. Society, with adaptation time, will place it at the forefront of the sector.

Changpeng Zhao

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