A visual representation of the cryptocurrency bitcoin.
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Cryptocurrency companies dominated the high street at the World Economic Forum in Davos this year, a notable difference between this edition and the last one in 2020.
The notable presence from the industry came even as the cryptocurrency market crashed. This was triggered by the collapse of the so-called algorithmic stablecoin terraUSD or UST, which saw its sister token Luna drop to $0 in May.
Meanwhile, global regulators are setting their sights on the cryptocurrency industry.
The World Economic Forum is the annual gathering of global business and political leaders that aims to set the year’s agenda.
Against this backdrop, it was the perfect time to catch up with some of the top players in the cryptocurrency industry. This is what I learned.
Thousands of cryptocurrencies could collapse
There are currently over 19,000 cryptocurrencies and dozens of blockchain platforms in existence.
Blockchain is the technology that powers these digital currencies and platforms including Ethereum, Solana, and many others.
Many industry executives view the current market situation as unsustainable.
Brad Garlinghouse, CEO of cross-border blockchain company Ripple, has predicted that there may only be “dozens” of cryptocurrencies left in the future. He said that there are about 180 fiat currencies in the world and there is no actual need for many cryptocurrencies.
Web3 CEO Bertrand Perez likened the current state of the market to the early Internet era, saying that there were a lot of “tricks” and that many of them “didn’t have any value”.
Brett Harrison, CEO of cryptocurrency exchange FTX US, said there are “two clear winners” when it comes to blockchain platforms.
You may have heard of stablecoins. It is a type of cryptocurrency that is supposed to be tied to a real asset.
Practically speaking, stablecoins like Tether or USD Coin, which are meant to mirror the US dollar one-on-one, are backed by real assets such as coins or bonds. They have a reserve of these assets in order to maintain the dollar peg.
You may have also heard of the disaster surrounding terraUSD or UST. This is the so-called stable algorithm. Instead of maintaining the currency peg by holding a reserve of assets, it aims to emulate the US dollar and maintain stability Through a complex algorithm.
But this algorithm failed and caused TerraUSD to lose its hook and crash.
The cryptocurrency industry has tried to warn users to ensure they know the difference between an arithmetic stablecoin, such as terraUSD, and others backed by assets.
Jeremy Allaire, CEO of Circle, one of the companies behind the USDC issuance, said the terraUSD crash “made it clear to people that not all stablecoins are alike.”
“It helps people distinguish between a well-regulated, fully held, asset-backed dollar digital currency, such as USDC, and something like terraUSD.”
Ref Collins, co-founder of BLOCKv and co-founder of another stablecoin, said the terraUSD saga would be “probably the end” of most algorithmic stablecoins.
The industry welcomes the bear market
Believe it or not, the cryptocurrency industry She welcomed the recent market crash, which saw major tokens like bitcoin drop more than 50% from all-time highs.
“We’re in a bear market,” said Web3’s Perez. “And I think that’s good. It’s good, because it will exonerate the people who were there for bad reasons.”
This feeling was echoed by other executives as well Say The skyrocketing price has pushed people to focus on speculation rather than product building.
″[The] The market, in my personal opinion, may have become a bit irrational, or perhaps a little reckless. And when times like these come, [a] Correction is usually needed, and at the end of the day [is] Mihailo Bilik, CEO of Polygon . said:// descriptor please ///.
Regulation is coming, but thinking has changed
Before the World Economic Forum, Christine Lagarde, president of the European Central Bank, said she believes that cryptocurrencies are “not worth anything.”
It seemed to me that the regulators and the authorities were still hostile to cryptocurrencies, just as they had been for the past few years in Davos.
But the executives said regulators’ thinking, for the most part, had shifted to something somewhat more positive.
“I think we came a long way three or four years ago when I just got here in the snowy version of Davos and somebody said, ‘You know, crypto is still a bad word here. That’s no longer the case,'” Ripple’s Garlinghouse said.
“I think it is constantly changing both the regulators and the big companies,” said Polygon’s Bilic. “Everyone wants to get more involved in crypto now, no one is ignoring the industry anymore.”
In March, US President Joe Biden signed an executive order calling on the government to examine the risks and benefits of cryptocurrencies. However, there is no major regulation of cryptocurrency in the US and other major economies.
Garlinghouse said he wanted “clarity and certainty” from regulators.
Meanwhile, BLOCKv’s Collins called Lagarde’s comments “ignorant.” He highlighted the tension that still exists between the cryptocurrency industry and some authorities in traditional finance.
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