Navigating The Emerging Digital Asset Ecosystem
Henri Dethier shares a white paper on blockchain and cryptocurrencies and emerging technologies.
Despite generating considerable enthusiasm, blockchain and cryptocurrencies—more than other emerging technologies—have presented head scratching dilemmas. Will there be a dominant platform or protocol? How can you benefit from network effects? Will new standards promote levels of interoperability? Addressing those questions might be a slow process, but it will lead to the emergence of digital assets. Digital assets— unlike cryptocurrencies—should be taken seriously by financial industry leaders. Digital assets are not only estimated to become the biggest financial asset class, with 13-digit market capitalization by the end of the decade, they could also bring as much financial innovation as the explosion of derivatives and structured products in the 1980s. For financial institutions and their customers, they could increase market liquidity, transparency, accessibility, and at the same time reduce transaction costs and associated risks dramatically. Furthermore, new products and services could be developed that benefit from core blockchain properties, for instance via smart contracts. As a result, the rise of digital assets is likely to prove those wrong who imagined blockchain uniquely useful as a particular type of database, without the need of a network-wide digital asset.
Don’t be fooled: This will not only involve cryptocurrencies and the existing cryptomarket, which is still a niche market with a market capitalization of less than €500 billion1. After all, there is a chance it will stay a niche market due to failed enterprise and market adoption as well as a lack of regulatory frameworks. Except for Bitcoin, and potentially Ethereum, the trust in the majority of those cryptoprojects has actually eroded, and enterprise partnerships have been halted. The situation is even worse considering the hundreds of billions invested in ICOs—the cryptocurrency equivalent of IPOs—that instead of fueling adoption have been converted back
to fiat currencies rewarding only the audacious early blockchain entrepreneurs.
Key points include:
- Unlocking the potential of digital assets
- Navigating the emerging digital asset ecosystem
- The benefit from network effects and shaping the ecosystem
Read the full article, Navigating The Digital Asset Ecosystem, on WebAssets.BCG.com.