In the course of the evolution and development of society, the world economy has been undergoing major transformations. All this leads to changes that either undermine the existing system or work for its benefit. It is especially difficult for society to undergo transformations that lead to a change in the mechanisms of relationships between economic entities. One of such large-scale and significant events is the emergence and mass distribution of cryptocurrencies. Blockchain technologies and digital assets can solve a lot of problems of the modern economy, namely, to eliminate a whole link of useless intermediaries in financial relations between people and companies. This will lead to the disappearance of bureaucracy.
The crypto revolution is inevitable. Every year digital assets become more and more popular and penetrate into different spheres of society and the economy. Despite the fact that not all national governments approve of this trend, the process cannot be stopped. But is it really good? Let's try to figure out what positive aspects the mass distribution of cryptocurrencies can lead to.
How the crypto revolution will affect the global economy and the banking sector
We asked experts what positive factors in the emergence of cryptocurrencies and the rapid development of blockchain technologies can be identified. Namely, to what positive transformations in the economy, in particular the banking sector, the so-called crypto revolution can lead.
Anton Balanov, head of Technology block at Sberbank (PJSC), is sure that in the future cryptocurrencies can become a new type of money. Crypto enthusiasts are already talking about this, especially in relation with stablecoins. It is important to bear in mind that any currency must perform 3 main functions:
- Be a measure of value. Cryptocurrencies can now only perform this function in ICOs. The main obstacle for cryptocurrencies to fulfill this function is unlimited volatility.
- Be a means of payment. Cryptocurrencies so far have little acceptance and use in the real sector of the economy. To date, there are very few companies that agree to accept payments in cryptocurrency.
- Be a store of value. Obviously, currencies with unlimited volatility are not suitable for long-term savings.
Perhaps, in the future these problems will be solved and then it will be possible to consider cryptocurrencies as a full-fledged form of money.
The expert also says,
“Blockchain technology is an expansion of opportunities for the exchange and distribution of money. Electronic wallets, some exchanges and exchangers already allow financial transactions to be carried out directly between participants, without intermediaries or commissions. This opportunity can make life much easier for those who do not have access to banking services. It is no coincidence that cryptocurrencies have gained notable popularity in some countries of Latin America.”
Nazir Naurzokov, Project Solutions Engineer at Acer/Altos in Russia, is confident that it is the technological implications of the advent of cryptocurrencies that can truly impact the current economy. According to the expert, cryptocurrencies in theory can become a reserve currency, as it happens around the world with the dollar and the euro, especially in crises. Ethereum and bitcoin are able to reduce dependence on traditional currencies subject to inflation, all due to the fact that the amount of cryptocurrency is limited and it cannot be subject to inflation at all.
Alfio Bardolla, financial coach, businessman, author of 9 books and Founder of the Alfio Bardolla Training Group, had his say on the subject,
“Blockchain technology guarantees a speed of money transfer that contemporary banking systems cannot achieve even remotely. It is a matter of transferring from days of waiting to seconds of waiting. In addition, each individual cryptocurrency-related project can bring improvements to the banking sector (take, for example, smart contracts that allow transactions and control of their execution using mathematical algorithms).”
Timofey Morozov, Content Manager of crypto projects at the TOPOS agency, emphasizes that the development of blockchain technologies is the development of not only the financial industry, but also many others. Art, digital property, digitized documents and contracts, the gaming industry—all these areas are developing under the influence of blockchain technologies and related trends.
The expert also notes,
“From an economic point of view, blockchain technologies provide access to financial services around the world. This advantage is especially important for those who do not have access to basic financial infrastructure. Cryptocurrencies give us an alternative. This is a new class of assets that can be used at the exchange just like fiat currencies. Also, cryptocurrencies allow you to transfer funds around the world with a high transaction speed.”
Konstantin Moroshin, Product Owner of ITGLOBAL.COM's ChessNFT.com project, believes that cryptoeconomic systems can provide a more decentralized, even and fair distribution of capital. For example, money does not reach many developing countries (and if it does, it may be lost for development) due to the character of the existing financial system. Cryptoeconomics solves this problem. Funds can be distributed very quickly, and through transparency, the effectiveness of spending can be tracked.
Vladislav Akeliev, Director for Development of the ECOS cryptocurrency investment platform, highlights the benefits that the crypto revolution for the economy as follows,
“First of all, this is the absence of intermediaries who carry out transactions. Thanks to the blockchain, everyone will be able to transfer money with minimal fees. Migrants from North America are already taking advantage of this, sending half of their monthly salaries to relatives for a dollar and a half. Moreover, it happens much faster than with traditional methods. It is also an opportunity for residents of countries with weak economies to get a loan with a low interest rate. This is especially vital for people who do not have the opportunity to get a bank account.”
Mikhail Alyonushkin, Managing Director of 3V FUND, considers the anonymity of transactions, the reliability of the data registry and the positive aspects of the blockchain to be the main advantages of the inevitable crypto revolution. Also, the massive introduction of digital assets into circulation can lead to a free market. But how good it is for society and the economy is a philosophical question.
Aaron Chomsky, Head of Investment at ICB Fund, shares his thoughts with the readers of our magazine,
“At the moment, the only real impact of cryptocurrencies is efforts to develop digital analogues of national currencies. The digital yuan is already working in China, which on the opening day of the Olympic Games even exceeded the Visa payment system in terms of the number of transactions, while other countries are also thinking about launching their analogues.
“Indeed, why do we need all these intermediaries of payment systems and banks when the State can carry out all these processes on its own, which will not only save costs, but also increase the efficiency of monitoring by regulators. For example, this system will allow subsidies to be credited immediately to the account of the final recipient, as well as to catch fraudulent transactions and control the circulation of funds. The last point, of course, can also be used to the detriment of citizens, for example, to deprive people objectionable to the regime of the opportunity to use their money.“
Dmitry Noskov, an expert at the StormGain crypto exchange, notes that cryptocurrencies have a huge number of advantages compared to traditional financial assets: anonymity, speed of transactions (almost instantaneous) and relatively low commissions. Many governments have already begun to use blockchain technologies for fighting corruption, creating platforms for public services and setting up their own digital currencies. The expert also notes that now the world is becoming more and more virtual, with financial transactions going digital, and the crypto revolution contributing to the gradual transition of the global financial system completely online.
Denis Smirnov, blockchain specialist, cryptocurrency researcher, as well as a Liquidity Manager for EMCD, comments,
“Blockchain provides the State with great opportunities to optimize the monetary system and eliminate bureaucracy in the economy, through the use of smart contracts and products such as central bank cryptocurrencies (CBDC). CBDC have the potential to automate tax collection, making any tax crimes simply impossible, and also making corruption much more difficult. PwC’s experts predict that by 2030 the use of blockchain technologies will add $1.7 trillion to the growth of the global economy.”
According to Georgy Galoyan, Founder and CEO of DAO.vc, the main positive factor of the crypto revolution can be called decentralization, which implies that there is no centralized governing body in cryptocurrencies. Besides, cryptocurrencies have no borders since transactions can occur from anywhere in the world. Among the advantages, the expert singled out the deflationary model instead of the inflationary one, the advantages of the independence of financial flows and the creation of new basic forms of value.
Vyacheslav Tsurka, CEO of Tiger.Trade, shares his opinion,
“Talking about the social significance of cryptocurrencies, we should say that they may become an alternative payment system and protection against inflation. Blockchain is also an opportunity to create powerful computing and analytical data centers that are not centrally regulated and are independent. And here the number one question is who will own the key.”
The expert also notes that in fact the crypto revolution has already occurred. This happened at a time when digital tokens and NFTs began to be bought by multinational corporations like Adidas, Samsung and investment banks like JPMorgan into their portfolios. Big capital is actively entering the blockchain space, and new technologies with their architecture automatically join the real, physical economy, emerging from the dusk of an abstract decentralized world.
When a major bank or fund buys NFT, it may be viewed as direct investment in blockchain capital. It is difficult to estimate the size of the market for derivative financial blockchain products. But we can assume that this is already a very big share of the economic pie, which is constantly increasing.
According to Bloomberg, the market for metaverse-related ETFs alone is over $2.2 billion, with the prospect of growing to $800 billion in a couple of years.
Crypto revolution opportunities for business and society
Blockchain and cryptocurrencies have become one of the most discussed and popular topics in recent years. The influence of these technologies is has been steadily growing, and more and more experts have been talking about the crypto revolution lately. But any technological revolution brings both positive and negative changes.
At the moment, blockchain technology is no longer super-innovative. It is used by a large number of market participants. Many processes are already established, production facilities are deployed, technologies are used and resources are involved while the market continues to form. Blockchain as a technology has asserted itself and is developing. Moreover, a slight decline in this technology is currently hapenning. So, what can this technology give to society and, in particular, to the banking sector?
Anton Balanov believes that the creation and development of any new technologies is usually a positive thing. The development of new technologies usually leads to new material resources being created and the quality of human resources being improved. When a successful technology is introduced, the growing attention of people to it is converted into money that goes to establish this technology and a growing trend for its consumption.
The experts says,
“It is important that the innovation being introduced be supported in society and capitalized financially for people not just discuss, but use the innovation and spend some resources on its acquisition and operation.
“If the technology is in demand, a trend is formed, and it is noticed by other players in the market beginning to produce similar products and study the technology, which causes the development of the technology, the formation of a new market, the growth of its capitalization and the entrance of more and more new participants into this market. Thus, if the new technology acquires a sustainable trend, it forms a new market and improves the well-being of all participants in this new market and society as a whole.”
Ignes Terrenas, head of communications at Bybit crypto exchange, notes that a great variety of crypto assets are now available to billions of people in different, geographically and economically, regions. The growing popularity of cryptocurrencies and tokens is leading to more use options. The growing digital asset class is breaking down the barriers inherent in traditional financial services by reducing overheads, transaction costs and the need for intermediaries. This benefits populations living with less stable national currencies and with difficulty accessing banking services.
Blockchain technologies promise to be the catalyst of trust. They provide mechanisms to increase the transparency, verifiability and security of transactions or proof of ownership. Due to their open structure and instant traceability, blockchains are becoming more commercially scalable as technology advances.
The experts continues,
“At the infrastructure level, a crypto-inspired financial revolution will change the way the global financial system works. Smart contracts will replace paper-based processes, reduce human error and make transaction automation convenient for investors, retail clients and financial institutions. Wherever you are, you will soon take for granted that transactions, payments and access to financial data are instant, for they will all be based on the blockchain.”
Igor Zakharov, CEO of DBX Digital Ecosystem, notes that new technologies have changed the global economy radically. The pandemic, crisis, the emergence of blockchain, cryptocurrencies and smart contracts are forcing businesses to conduct business between economic entities in a new way. Old schemes are no longer as effective, and sometimes do not work at all.
The expert highlights the following advantages of the crypto revolution:
- The advent of blockchain technologies has opened up many new opportunities for businessmen. The advent of cryptocurrency has accelerated the transactions while reducing side costs.
- The crypto revolution has brought business relationships to a new level. Long negotiations are a thing of the past, and compliance with the terms of the contract is automatically controlled by a smart contract while money for the completed contract is credited instantly without human intervention.
Konstantin Moroshin speaks about this in the following way,
“The monetary system we are accustomed to may seem to us eternal. But this, of course, is not the case. We did not notice how we almost stopped using cash, and now plastic cards seem unnecessary since everything can be paid by phone. Cryptocurrency makes the process even faster and the overhead even less because no intermediaries are needed for transactions. Imagine that you can transfer any amount of money to any country in a second almost free of charge.
“Other advantages are transparency, publicity and reliability. I mean, individual data cannot be swapped or hidden. These properties allow you to build systems for many industries related to legal, finance, management. This is a very versatile technology.”
Nazir Naurzokov believes that among the uniquely positive implications of cryptocurrencies one can single out the creation of blockchain technology: it allows you to store any data (be it financial transactions in the case of cryptocurrencies or the right to own something in the case of NFTs and other tokens) in a decentralized and secure way. According to the expert, this technology is likely to be adopted by traditional banks and payment systems in the near future, since blockchain will allow their customers and users not to worry about the safety of their savings and money transfers. Blockchain cannot be hacked, or its operations cannot be interfered with, making it almost impossible to steal the money.
Egor Abramov, Principal of Fort Ross Ventures, adheres to the following position on this matter,
“The main innovation brought by the crypto revolution is the ability to own digital assets. Such a simple and obvious thing, but still inaccessible. Imagine, a man in the Stone Age could already own a skin of a bear, a stone ax and beads. The ownership was confirmed by the fact that the lace hung around his neck. He could transfer this necklace to another person, exchange it for a piece of meat or (subsequently) sell it for money. And, of course, the ability to own objects is an essential property of the world. Imagine the potential of the blockchain, which finally gave humanity this opportunity in the digital world. This is an advance from the Stone Age to the developed society.”
Speaking of the advantages of developing blockchain technologies for business, Vladislav Akeliev focuses on the fact that smart contracts allow companies to cooperate with each other transparently, safely and effectively for paying and providing services. All processes are automated and available to all participants in real time. Also, according to the expert, it is much more efficient to attract funding with the help of cryptocurrencies.
Aaron Chomsky considers how cryptocurrencies and blockchain can be beneficial to society,
“Do not forget that the cryptocurrency market has become a sort of ground for testing new ideas and technologies, for instance, stablecoins or metaverses. Of course, most projects are copies of copies, but useful ideas also manage to arise from time to time. It is too early to talk about any serious effect of NFTs, play-2-earn and metaverses on the real economy. It is quite possible that it will not happen at all and the current hype will fizzle out by the end of the year.
“And of course, it is necessary to identify the main positive effect for ordinary people. The crypto market has allowed everyone to become a venture investor. Do not underestimate this democratization, which allows anyone to invest at their own peril and risk in any interesting project at a very early stage of its development. Previously, only venture capitalists, members of closed clubs, could do this.”
Denis Smirnov believes that the advantage of the crypto revolution for society might be the optimization of interaction between market participants, reducing the role of intermediaries in such relationships. According to the expert, blockchain allows solving one of the main problems of human interaction, that of trust.
