The World Economic Forum released a blog post on Monday discussing the cryptocurrency industry's future. It said that the applications of blockchain and cryptography technologies are already being widely used in the financial services industry.
The forum noted that the rapid emergence and evolution of blockchain technology has created a huge opportunity for the financial services industry by urging the public to monitor the activities of major banks and other financial firms.
"Indeed, as a test of the staying power of digital assets and blockchains at the core of financial services (and other areas of the global economy), watch what the big banks and mature financial services firms do, not what they say," the report read.
The WEF also noted that the widespread adoption of blockchain and cryptography technologies is inevitable. Despite the various risks associated with the cryptocurrency industry, the WEF acknowledged that the sector is relatively safe due to its transparent nature.
According to the WEF, the year 2022 has been dreadful for the cryptocurrency industry. The industry's total value has dropped to around $800 billion from over $3 trillion at its peak.
Regardless, the organization claimed that the crypto winter in 2022 will lead to the emergence of more resilient business models and use cases using blockchain and technology.
Hindrances new technologies face
Numerous examples of technology being co-opted by bad actors, including those involved in criminality, unethical practices and greed. The rapid emergence and evolution of blockchain and crypto-related innovations have exacerbated these issues, especially in lightly regulated sectors.
The origin of cryptocurrencies can be traced back to the dark web, where anonymous trading activities were carried out. Despite the industry's various issues, the WEF noted that the best way to prevent harmful effects from emerging technologies is by encouraging responsible users.
"The more enduring approach with all breakthrough technologies is to net out their harmful effects by placing technologies (like all tools) in the hands of responsible actors and encouraging their responsible use," the agency continued.
Due to the various incidents that have occurred in the cryptocurrency industry, users' trust has started to erode. For instance, the collapse of the FTX exchange has drawn the attention of regulators worldwide.
Thanks to the various controversies that have occurred in the cryptocurrency industry in 2022, policymakers and regulators will have to face the difficult issue of regulating and ensuring that the proper use of cryptography and blockchain technologies is upheld.
What crypto brings to the table
Blockchain and cryptography have wide-ranging applications in various sectors, including financial services. The WEF identified several prominent organizations currently using blockchain and cryptography in their operations.
Major financial institutions such as JPMorgan have started to embrace blockchain and cryptography technologies. This is not a surprise, as the firms' executive teams and boards have already acknowledged the need for digital transformation and cybersecurity.
Additionally, the increasing number of financial and merchant organizations accepting cryptocurrencies as a form of payment is expected to continue. In recent years, PayPal, Microsoft and Overstock have started accepting cryptocurrency payments. These organizations recognize the various advantages of this technology, such as its low transaction fees and fast settlement processes.
Stablecoins, essentially digital assets pegged to the U.S. dollar, have also made it easier for businesses to process transactions with cryptocurrencies. They do so without worrying about the volatility of Bitcoin and other digital currencies.
The ease of use of cryptocurrencies has also improved significantly, making it easier for people to trade and buy digital assets. In the coming years, more innovations are expected to make it easier for people to use this technology. Some of these include the development of payment apps and non-custodial exchanges.