The Fintech Times recently participated in Token2049, a premier annual event focused on cryptocurrencies, held alternately in Dubai and Singapore. This gathering brings together founders and executives from leading Web3 enterprises to network and exchange insights about the evolving crypto landscape. Throughout the event, there were ample opportunities to engage with key industry figures, shedding light on the intersections between traditional finance and the burgeoning realm of cryptocurrency.
### Understanding the Technology Behind Crypto
At the heart of cryptocurrency lies blockchain technology, which operates on a decentralized network of computers, often referred to as nodes. These nodes facilitate the creation and management of blockchain protocols, essentially the foundational rules that govern how each blockchain functions. The term “Web3,” introduced by Ethereum co-founder Gavin Wood in 2014, gained momentum in 2021, capturing the interest of cryptocurrency advocates, tech giants, and venture capitalists alike. The primary focus of Web3 development is to enhance user experience and accessibility for decentralized applications, allowing users to engage with these apps directly rather than interfacing with the underlying blockchain technology. Azeem Khan, COO and co-founder of Morph, expressed optimism for a future where blockchain technology is seamlessly integrated into financial tools, to the extent that users are unaware they are utilizing blockchain. He likened the current competitive focus on database technologies to a Web2 company debating between different database systems, which he views as an unproductive differentiation.
### The Buzz Surrounding Web3
The excitement surrounding Web3 can be attributed to advancements in web browsers that now support a programming language known as WebAssembly. This low-level language operates with near-native efficiency and allows programming languages like C/C++, C#, and Rust to execute within web environments, enabling browsers to perform functions akin to traditional operating systems. Kadan Stadelmann, CTO of the composable blockchain platform Komodo, predicts that browsers will evolve into the dominant operating system, surpassing established platforms like Windows and Linux. Essentially, Web3 aims to empower users through blockchains, cryptocurrencies, and NFTs, transitioning from a read-only (Web1) and read-write (Web2) model to one where users can read, write, and own content. This paradigm shift is particularly relevant in both emerging and developed markets, where cryptocurrencies serve as a means of value retention in the former and as investment vehicles in the latter.
### Divergent Perspectives on Crypto: Revenue vs. Innovation
The impact of cryptocurrency varies significantly between developing and developed nations. In regions where traditional payment systems are underdeveloped, crypto offers a vital alternative. Cecilia Hsueh, CEO and co-founder of Morph, highlighted the contrasting mindsets: in developing countries, users prioritize revenue generation and practical financial applications, while those in developed regions are more inclined toward innovation and early adoption of new technologies. A notable illustration of this trend is the game Pixels, which has become the first Web3 game to exceed 100,000 daily active users. At the recent YGG Web3 Game Summit in Manila, co-founder Jeffrey ‘Jihoz’ Zirlin noted that a significant portion of Pixels’ traffic originated from the Philippines, where players are using the game as a means to generate income through its play-to-earn features.
### Assessing Risk in Crypto Investments
As the allure of crypto investments grows, so does the concern regarding their inherent risks. Anastasia Ulianova, co-founder and co-CEO of A.R.I.A., a crypto rating agency, remarked on the typical mindset of investors, who often base their choices on safety, trending news, or personal recommendations. This approach, she warns, resembles gambling more than informed investing and poses significant risks. Discussions around blockchain and crypto often center on decentralized finance (DeFi), but widespread adoption of DeFi applications is hindered by perceptions of high risk and insufficient regulatory frameworks. Nitin Agarwal, chief revenue officer at FV Bank, drew parallels between the current crypto landscape and the chaotic early days of media streaming, where unregulated platforms like BitTorrent posed significant risks to users. He emphasized that just as regulated services like Netflix emerged to offer safer, more reliable options, the crypto industry must also navigate the challenges of regulation and consumer protection to gain mainstream acceptance.
### Looking Ahead: The Future of Regulation in Crypto
A key takeaway from the Token2049 conference at Dubai’s Madinat Jumeirah was the unanimous call for regulatory frameworks within the crypto industry, with participants viewing such measures as essential for bridging the gap between traditional finance and emerging Web3 services. Christian Borel, head of MENA at Swiss crypto bank AMINA Bank, likened the current stage of crypto development to the early days of the internet, suggesting that the industry is only beginning to tap into the potential of blockchain technology. He expressed confidence that advancements in AI and blockchain will significantly reshape the banking landscape by the year 2049. As institutional investors increasingly enter the crypto space, the speed of regulatory implementation becomes a focal point of concern. The pressing question remains: how will these regulations impact the autonomy of this nascent industry, and could they inadvertently create the very obstacles they aim to overcome?
