By David Drake
At the beginning of this year, cryptocurrencies received a huge bashing from world leaders during the World Economic Forum (WEF). Blockchain, on the other hand, was praised for its ability to revolutionize different sectors. Nearly two months after global leaders reflected on digital assets, it is emerging that Europe is ready to hit it off with blockchain technologies despite the volatility of cryptocurrencies.
A report released by IDC shows that Europe is now at the forefront of investing in blockchain. In 2019, it is predicted that the continent will invest in excess of $800 million in technologies related to blockchain. When staggered to 2022, total spending in blockchain technologies is expected to hit the $3.6 billion mark. The region’s CAGR for the 2018-2022 period is estimated to be 73%.
The perception towards blockchain appears to clearly contrast that of cryptocurrencies. For a growing population, cryptocurrencies no longer represent a stable investment option due to the fact that they are not viable as stores of value, have zero chance to overtake fiat currency and their adoption for retail use is limited.
According to Navjit Dhaliwal, CEO of Iagon, bitcoins’ volatility has caused cryptocurrencies to be viewed negatively, but the arguments put forward by global leaders during the WEF conference on new technologies should not be used to judge the future of cryptocurrencies.
He says, “Unfortunately, the volatile market has left a few people disillusioned by the idea of bitcoin and similar cryptocurrencies. However, the issues that were argued during the Davos conference, are similar to those that have previously been launched against other budding technologies, including the internet. Bitcoin is essentially the AOL of the Blockchain, in a sense that, even a full fall from greatness for the starting cryptocurrency does not ensure that the others will follow suit. Yes, the arguments raised have relevance, but they do not seem to be strong enough to predict a bleak future for the market as a whole.”
The Crypto Benefit
Despite these concerns, cryptocurrencies, which are digital assets developed on blockchain, offer some benefits to users. One of these benefits is that they allow clients to transmit funds immediately, safely and without involving third parties.
These advantages are definite when compared to international bank transfers that take days and are subject to cross border regulation. This is because cryptocurrencies make it possible to effect transfers within seconds through safe digital ledgers which confirm transactions simultaneously. At the same time, digital currencies enhance remittance of funds through mobile phones. BitPesa, for example, allows users to remit virtual currencies globally.
Virtual currencies are also capable of promoting global business, supporting the financial industry and altering how business is generally conducted. Digital currencies promote electronic ecommerce and with rising credit card fraud cases, these currencies can help reduce such risks by allowing customers to send funds securely online.
Generally, the potential application of cryptocurrencies in day-to-day operations has been increasing. But global leaders at the WEF conference highlighted key areas that still need to be addressed to unleash the potential of this industry. These include regulation to ensure that digital currencies are not used for illegal activities. Manipulation of cryptocurrency prices is also an emerging issue. In my view, this is a challenge that companies in the cryptocurrency space can easily address through active governance.
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.