Covid-19 impacts on financial markets and the global economy may favor a moment of cryptocurrencies breakthrough, but this should still take a while. The assessment is from emerging technologies consultant, former Qualcomm’s, Mark Blackman, and the professor of California Western School of Law, James Cooper, in an article published in Coindesk.
Experts consider that some facts lead to this reasoning. Among them, the injection of trillions of dollars by central banks to contain economic slaughter and proposals to create a digital dollar from some U.S. congressional lawmakers.
However, they question whether the U.S. and the rest of the world are ready to accept digital currencies and blockchain-related innovations. First, because the legal structures to regulate the way in which society uses new technologies, including blockchain, are always behind the technologies themselves. In this sense, regulatory and supervisory agencies have been slow to monitor the operation of this complex technology.
Cryptocurrencies beyond Covid-19
The scarcity of essential legal prescriptions also prevents massive adoption. Financial services, property titles and tax accounting require new regulations to accommodate the changing realities brought about by blockchain technologies. According to them, it is necessary for example, to clearly determine the extent to which smart contracts can be claimed in a court.
They also advocate increasing privacy protections before there is a broad adoption of blockchain technologies. Without these foundations established, they argue, it will be difficult to rely on this new technology in all of our social relationships – identification, money, reputation, and so on. This will not be easier, given the immediate need to rebuild financial systems and for many, employment itself.
In addition to legal challenges, there is the obstacle to the adoption. Despite all the problems related to fiat currencies, there is great comfort in the traditional security of today’s financial services. For example, if a thief steals a credit card, the bank covers undue expenses. If a bank goes bankrupt, the government bails out. And if the stimulus packages work, loyalty to the current centralized banking system will only increase.
Users should be responsible for their errors
Therefore, they argue that in order for the new world of cryptocurrencies to become popular, the average consumer must learn to work with the complexities of this technology. For example, consumers should be ready to assume their own losses by theft or error. That is to say, there is a huge need for information and education for this to become a reality. In addition, there are few decentralized applications that have piqued the public’s interest or demonstrated a real utility.
Even if the U.S. Congress considers using a digital dollar, these top constraints will remain. It is also possible that the solutions designed by the government fail when compared to those of the technological competitors.
Although the experts’ view is only partially optimistic, it is necessary to remember that adoption on a daily basis and use as a store of value have trodden different paths. In this latter context, institutional investors have already placed cryptocurrencies in their portfolios and the trend is that more and more will come to consider the cryptoassets. There are many examples in the world where this is already taking place, and that does not ultimately depend on the mass adoption of cryptoassets.