This is Part Two of a multipart series on blockchain and crypto in China. Read Part One about the digital yuan here.
When Satoshi Nakamoto introduced the Bitcoin (BTC) white paper over a decade ago, it was hard to imagine what role the cryptocurrency sector would play in global finance. Some argue that the invention of blockchain technology is comparable to the revolution brought on by the invention of the internet back in the 1980s. Starting as a niche space for tech enthusiasts, in just 12 years Bitcoin has become a serious player in the financial field, with its market capitalization closing in on Google, one of the world’s largest tech giants.
One of the reasons for the increasing popularity of, and people’s increasing interest in, crypto lies in the fact that the technology that forms the backbone of cryptocurrency promises more financial inclusion compared with legacy finance. It is especially important for developing countries and emerging markets with fast-growing economic potential — the regions with the most promising potential for mass crypto adoption. And while blockchain cannot solve all of society’s problems, it’s the community behind this industry that should address the factors causing financial exclusion. Being decentralized in its origins and driven by the community, the crypto industry indeed greatly prioritizes diversity and inclusion, including valuing the contributions of women and the LBGTQ+ community.
The general public discourse on the crypto space still suffers from the notorious reputation of the Silk Road saga and the ICO craze back in 2017 — 80% of initial coin offerings ended up being scams. Meanwhile, by appealing to the younger generations — who will soon enough be the major drivers of the world’s economy — crypto is certainly gaining its momentum. Just last year, PayPal, the world’s largest payments processor, announced it would allow its customers to buy, sell and hold cryptocurrencies, and the demand for that service has been greater than the company expected.
Also last year, the world witnessed the rise of the decentralized finance industry, and some even argue that DeFi will complete what Bitcoin started, proving “to be the guarantee of a better, more liberated future.” DeFi has become a symptom of the real shift from centralized to decentralized services, fueling massive innovation and growth in Web 3.0 protocols and the demand for the decentralized internet. Since the old financial system has rotted and degenerated, we have witnessed an unprecedented amount of money-printing by governments all over the world amid the COVID-19 pandemic. DeFi brings forward the prospect of a paradigm shift, promising not just the democratization of money but the democratization of finance, representing a seismic shift in the way people will bank in the future.
Due to its decentralized nature, the crypto industry is not and will never be a local trend — the changes that it causes to the financial landscape are global. With central bank digital currencies, or CBDCs, being researched by governments all over the world and more institutional players — such as MicroStrategy, Mastercard, Bank of New York Mellon, Tesla and many others — entering the space, it seems inevitable that the global economy will have to accept that crypto, and the technology behind it, is here to stay. These examples also clearly represent signs that the industry is maturing.
Meanwhile, not all countries treat crypto equally: India has had a difficult relationship with the crypto space for…