Since the launch of Bitcoin 12 years ago, there has been an abundance of copycat companies launching their own cryptocurrencies using the blockchain technology which underpins it. As a single, decentralized ledger of all transactions within the network, blockchains can revolutionize the way in which we conduct business in all facets of our lives.
In fact, it’s already begun to do so. Anyone who likes to keep up to date with the current news on cryptos will know that they are receiving the endorsement from a wider range of businesses, portals, and platforms than ever before. But despite the fact that some governments (like El Salvador) have welcomed cryptocurrencies with open arms, there are plenty of others who have a deep-seated mistrust of the technology behind it. So what can blockchain companies do to bridge this divide?
Targeting CBDCs
The fiat currencies we use today have already migrated into the online world to a large degree, with a significant proportion of financial transactions taking place digitally. For that reason, governments have been investigating central bank digital currencies, or CBDCs, which officially migrate their operations online.
CBDCs are similar to cryptocurrencies in that they would use the same blockchain technology (or at least something like it) to store records of all transactions in a single ledger. They would differ by keeping control of that ledger firmly in the hands of the bank itself or the state which owns it, instead of being open to everyone as cryptocurrencies are. Nonetheless, by targeting CBDCs, blockchain can gain greater respect and legitimacy among the mainstream markets.
Integrating exchanges
At present, cryptocurrency users can only buy and sell their digital assets on dedicated exchanges. It is expressly forbidden for established stock exchanges in many countries to include commodities like bitcoins, ethers, dogecoins, and others among their trading options. However, integrating the two separate entities together would facilitate the acceptance of cryptocurrencies by wider society and legitimize the blockchain technology behind it in the process.
This may already be in the pipeline. It was recently announced that blockchain company Valereum are finalizing a deal to purchase the Gibraltar Stock Exchange (GSE). If successful, the exchange would become the first in the world where fiat currencies could be bought and sold alongside cryptocurrencies, with the latter used to buy the former, as well as stocks and shares and other tradable commodities, too.
Tightening security
A recent survey conducted by Deloitte found that a strong majority of financial professionals believe that blockchain technology is already effective enough and scalable enough to completely replace fiat currencies within a decade. However, the biggest concern among them was the issue of cyber security, since a hackable currency is a highly vulnerable one in the world of finance.
As such, blockchain companies would do well to pour more resources into shoring up their online defenses and ensuring that major breaches – such as the scandal which rocked Ethereum in 2016 – become a thing of the past. Once satisfied that blockchain is indeed safe and secure, it would surely only become a matter of time before it played more of a role in underpinning fiat currencies as well as crypto ones.
Although a certain degree of distrust still remains towards cryptocurrencies and the blockchain technology which serves them, the reputational integrity of both has come far in recent years. Blockchain firms are doing all they can to ensure that progress does not falter.