The Good, The Bad and The Libra - Are We Now Exiting The Blockchain Wild Wild West?
What was once considered avant-garde is now considered normal, boring even. Societies are scared of change and tend to embrace it reluctantly, if at all.
Our grandparents were terrified of the impact of Mick Jagger and Monty Python were having on our parents.
Now huge legacy acts they are celebrated in their fields for taking music and comedy that one step further. But other acts since have taken what was considered the vanguard and have taken it so much further.
Similar patterns can be seen across culture, governance and technology.
I would argue that in a generation cryptocurrencies will become the Mick Jagger of the banking world; scary at first with questionable morals, but very much part of the establishment.
Blockchain used to be synonymous with the ‘dark web’. Cryptocurrencies by their nature were difficult to monitor and regulate; and therefore were more open to exploitation. In the past 10 years police and regulatory authorities have played a cat and mouse game, trying to tame crypto and make it safe. It has been one of the great ironies of recent times; blockchain technology being heralded as unhackable and safe. Cryptocurrency however was synonymous with dodgy dealings, scams and generally insalubrious characters.
Why did this happen?
Well, the lack of regulation is of utmost importance. When investors first started buying bitcoin and other crypto currencies the system was open source and decentralised. This meant there were no protections or safeguards to prevent external threats.
Also by its nature cryptocurrency in theory and cryptocurrency in practice are two very different beasts. They are third party actors providing a variable that theorists didn’t consider. Mobile Wallets and crypto-exchanges took on a form that no one had predicted.
The get rich quick nature of early crypto enthusiasts was also open to manipulation. There was an excited naivety about it that created a hype cycle that was open to exploitation. Hackers made the most of the opportunity to manipulate this.
All this, despite improvements in security, have kept cryptocurrency from becoming truly part of furniture. The general populace still see it as a curiosity, rather than a must have. This in part, must surely be down to the horror stories of people losing their digital assets through crypto piracy.
This is changing though. Regulators like the FCA have stepped in. The FCA has recently allowed 3 blockchain firms to join its innovative regulatory sandbox. Across the globe it developed economies; bitcoin is becoming more accountable, the threat lessened.
THE GAME CHANGER – Libra
The great unknown in all this is Libra, launched in a huge fanfare last month. Long term fans of crypto must feel like their favourite cult band has just released a single that has taken them to the mainstream. Like claiming they saw the Kings of Leon at London Astoria in 2002.
This undeniably has an element of truth to it. Facebook are putting a lot of clout into the launch of Libra, appointing industry heavyweight David Marcus as its head. The amount of buzz being created around it is huge. It’s also got the undeniable endorsement of a negative tweet from President Trump.
The underlying regulatory and security challenges remain then… But this is clearly bitcoin's first steps to going full Jagger.
Register for your Early Bird tickets to FinTech Connect on 3–4 December at ExCeL, London.