Litecoin’s Charlie Lee contradicted popular belief on day three of Money 20/20 by stating that cryptocurrency encourages free movement of money and blockchain advocates should expect a positive change in privacy protocol, as fungibility is the only missing component for widespread adoption.
A trade-off between privacy and scalability exists because of the building blocks that cryptocurrencies are currently based on, but David Chaum from Elixxir revealed that his startup has privately developed new cryptography that eliminates these issues and can process thousands of transactions per second, on a quantum level of security.
Chaum suggested that for cryptocurrency to become dominant, consumer payments systems should match the functionality of WeChat, because messaging platforms are integrating remittance capabilities while digital wallets are prioritising communication.
“Privacy is the secret ingredient that can make this happen,” Chaum said and Lee added that this form of friction is always prevalent, but to attain the same revolutionary transformation as the Internet experienced when evolving to Mosaic will take some time.
In a later session on the future of cryptocurrency, the panel speakers honed in on the cross-border payments industry and attempted to eradicate the notion that blockchain is a ‘get-rich-quick’ scheme, which has recently dominated headlines.
Ripple’s Asheesh Birla highlighted that blockchain has the capability of altering payment services into frictionless and efficient platforms. “Money should move as fast as information does today,” Birla commented.
Victoria Liu Edison from Ant Financial added that while technology enables a speedy to market process, those implementing blockchain should proactively engage with regulators to educate them about what their products are.
Cross-border payment needs to undergo a development because as Birla explained, the way money is moved to different countries is being done today in the same way that it was back in the 1960s, so leveraging a digital asset exchange for this purpose would be a “game changer”.
Speaking to Raymond Qu, founder and CEO of Geoswift, on this subject, he summarised these considerations and said that “The future of payments is not just a simple money flow, moving money one side to another side. It’s a combination of the new technology, quality of service and better user experience for end users.”
Although blockchain technology is still in its early stages and while rapid developments have taken place, recent studies suggest that the blockchain value-add to business will be over $3 trillion by 2030.
In addition to this, despite being a week ahead of the ten-year anniversary of the publication of Satoshi’s bitcoin whitepaper, Bloq’s Matthew Roszak said that it “still feels like we are in the Stone Ages of blockchain.”
Following up on this point, Bobby Lee from BTCC explored how many companies are taking the idea of blockchain and running with it, but for the technology to be truly different from databases, there needs to be a real-world use case, which has not been seen as of yet.
In discussion with Vijay Sondhi, CEO of NMI and personal investor in cryptocurrency banknote provider Tangem, he addressed the appeal of a payments system not requiring a trusted third-party and said that there is great interest in breaking free from the Visas and Mastercards of the world.
“The challenge is not the technology, but it is in fact being able to scale while also complying with regulation in a non-stifling way,” Sondhi said. He went on to say that since following this sector since 2012, there has been little adoption in consumer use.
Alongside this, scaling crypto in the US is most problematic because this country’s financial services are regulated by multiple agencies, other fintech hubs such as Singapore, which has a single unified regulator, can use a sandbox to test out use cases of blockchain.
Sondhi believes that the way consumers transact in the US and Europe is a process that does not need to be fixed, there is almost no friction involved in paying with a debit or credit card and the costs are not that high. However, in the B2B space, systems like Swift are slow and expensive, and this is the area in which players have a better shot at introducing the intersection of blockchain and cryptocurrency.
He provided the B2B cross-border payment service Veem as a good example, because this company is solving real-life problems.
In the first keynote session of the day, Katie Haun said that cryptocurrency has the potential of helping the two billion unbanked people.
Coinbase’s Asiff Hirji backed this point by saying that we are on the cusp of Internet 3.0: the first stage being the distributed version which was followed by the adoption of mobile and cloud technology, and now a decentralised system will be welcomed.
In addition to privacy concerns, the volatility of cryptocurrency remains an issue but Haun stated that 2019 will be the year of the stablecoin because it operates while being pegged to another asset, for example, the US dollar.