A visual representation of Bitcoin cryptocurrency.
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Cryptocurrency companies have dominated the main street of the World Economic Forum in Davos this year, a notable difference between this edition and the last one in 2020.
The high-profile industrial presence is emerging even though the cryptocurrency market has crashed. It was caused by the collapse of the so-called algorithmic stablecoin called terraUSD or UST, which saw its luna token fall to $ 0 in May.
Meanwhile, global regulators are looking at the cryptocurrency industry.
The WEF is the annual gathering of global business leaders and politicians to set the agenda for the year.
In this context, it was the perfect time to catch up with some of the major players in the cryptocurrency industry. Here’s what I learned.
Thousands of cryptocurrencies could crash
There are currently over 19,000 cryptocurrencies and dozens of blockchain platforms.
Blockchain is the technology behind these digital currencies, and the platforms include Ethereum, Solana and many more.
Many industry leaders attest that the current market situation is unsustainable.
Brad Garlinghouse, CEO of cross-border blockchain company Ripple, predicted that there may only be “dozens” of cryptocurrencies left in the future. He said there are about 180 fiat currencies in the world and that there is really no need for that many cryptocurrencies.
Bertrand Perez, CEO of the Web3 Foundation, compared the current market situation in the early Internet age, saying there were a lot of “scams” and many that “provided no value”.
Brett Harrison, CEO of cryptocurrency exchange FTX US, said there are “a few clear winners” when it comes to blockchain platforms.
You may have heard of stack coins. These are a type of cryptocurrencies that are meant to be linked to an asset in the real world.
In practice, stack coins such as tether or USD Coin, which could activate the US dollar one-on-one, are backed by real assets such as currencies or bonds. They have a reserve of these assets to maintain a bond to the dollar.
You may have also heard of debacle that is limited to a terraUSD or UST. It is a so-called algorithmic stablecoin. Instead of maintaining its bond by having a reserve of assets, it aims to mimic the US dollar and maintain stability through a complex algorithm.
But this algorithm failed and caused terraUSD to lose its stick and collapse.
The crypto industry has tried to warn users to make sure they know the difference between an algorithmic stablecoin, like terraUSD, and others that are backed by assets.
The collapse of terraUSD “made it very clear to people that not all stack coins are created equal,” said Jeremy Allaire, CEO of Circle, one of the companies behind the USDC issue.
“And it helps people distinguish between a well-regulated, fully booked, asset-backed digital dollar currency, like USDC, and something like this (terraUSD).”
Reeve Collins, co-founder of BLOCKv and co-founder of another stablecoin, said the terraUSD saga “is likely to be the end” of most algorithmic stablecoins.
The industry welcomes the bear market
This feeling was also shared by other leaders, who terrible the massive price increase has led people to focus on speculation rather than building commodities.
″[The] the market has, in my personal opinion, become perhaps a little irrational, or perhaps a little ruthless to some degree. And when times like this come, [a] correction is usually necessary and at the end of the day [is] healthy, ”said Mihailo Bjelic, CEO of Polygon// description please ///.
The rules are coming, but the mindset has changed
Prior to the World Economic Forum, European Central Bank President Christine Lagarde said she was worth that cryptocurrencies “are worth nothing.”
It seemed to me that regulators and authorities were still hostile to cryptocurrencies, as they had been in recent years in Davos.
But executives said regulators’ thinking had largely shifted to something a little more constructive.
“I think we’ve come a long way in the last three or four years, as I’ve literally just come here in the snow-covered version of Davos, and someone said, ‘You know, crypto is still a bad word here. It’s no longer I, so absolutely not that “antagonism” is the right description. I think ‘curiosity’, “said Ripple’s Garlinghouse.
“I think it’s constantly changing the two regulators, the big companies. Everyone wants to be more involved in crypto now, no one is ignoring the industry anymore,” said Polygons Bjelic.
In March, US President Joe Biden signed an executive order urging the government to examine the risks and benefits of cryptocurrencies. Yet there are no major cryptocurrency regulations in the United States and other major economies.
Garlinghouse said he wanted “clarity and security” from regulators.
BLOCKvs Collins, meanwhile, called Lagarde’s comments “ignorant.” He highlighted the tension that still exists between the cryptocurrency industry and some traditional financial authorities.
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