DAVOS: Why Cryptocurrency Need a “ Value for the Internet”

    Tanya Sharma
    Tanya Sharma
    Published on January 8, 2023 7:31 AM

    Updated on January 16, 2023 8:03 AM

    The international non-governmental organization has criticized regulators for failing to take prompt action to prevent the 2022 meltdowns that sparked the crypto winter.
    DAVOS: Why Cryptocurrency Need a “ Value for the Internet”
    Source: Unsplash

    Despite a bad run in the year 2022, the World Economic Forum (WEF) has indicated that cryptocurrencies will continue to be a vital element of the "contemporary economic arsenal". 

    The international non-governmental organization stated in a blog post on January 2, 2023, that the year 2022 not only saw people lose more than $2 trillion in cases like FTX collapse and death of the Terra blockchain, but the year also saw millions of diehard crypto utopians (and some crypto-anarchists) lose their fundamental trust in the entire blockchain process.

    Related: What Are the Safest Ways of Storing Cryptocurrency?

    WEF Discussion over Cryptocurrency

    In just over a decade, cryptocurrency has gone from being unknown to having a trillion-dollar worth. The forum, on the other hand, identified declining faith in the system as the most detrimental trend for embryonic business and blockchain technology, which was created to correct the mistakes that caused the 2008 financial crisis.

    The blog post also went into detail about the recent crypto market slump following the demise of the Terra blockchain, as well as the recent demise of FTX. "The market slump might be compared to the dot-com bubble, where most companies were wiped out but significant entities stood out," Dante Disparte wrote in a blog post.

    Adding Transparency in the Crypto space

    While policymakers (central banks in many nations) have issued warnings about crypto trading, the multiple failures have left them concerned about the future. The worldwide body chastised regulators for failing to take prompt action to avert the 2022 meltdowns that sparked the crypto winter.

    The global economic conference compared the crypto winter of 2022 to the dot-com bubble meltdown, saying that the bear market helped root out speculation and put the industry on equal footing with established institutional actors.

    “Policymakers who have been sounding an alarm about cryptos’ excessive risks, while failing to create sensible regulations, have been vindicated by not one, but multiple large-scale failures,”- Disparate stated in the post.

    The worldwide body, which is known to be a backer of central bank digital currency (CBDC), said that the cooperation of traditional banks like JPMorgan with crypto will develop the asset class into "responsible, always-on internet finance".

    Responsible Individuals in the crypto Space

    The blog concluded that there is a need to decrease the hazards of cryptocurrency by putting it in the hands of "responsible people" and encouraging safe use.

    “History is riddled with examples of otherwise good or neutral technologies being co-opted by bad actors and those ever-present human follies of greed, nescience, risks of opportunity or outright criminality. All of these are amplified in emerging, lightly regulated sectors and accelerated by technology. Indeed, no sector is risk-free, especially not one involving money. However, crypto punishes the errant at speed, giving bad actors few places to hide,”- Disparate stated at last.

    Chainalysis research found that in 2021, less than 1% of cryptocurrency transactions were associated with illegal behaviour. The cryptocurrency industry can hold its businesses and people accountable to protect customers by design with the correct data, tools, guidance, and collaborations.

    No other sector of the crypto ecosystem exemplifies transparency more than "decentralized finance" (DeFi), in which all transactions are public and the code underlying protocols are open to everybody to inspect. The entire cryptocurrency business should aspire for this level of transparency, and we've already seen a variety of excellent use cases.

    “There is an opportunity for the crypto and broader financial industry and its governing bodies globally to collaborate and work towards standards of conduct, including reporting on reserves and other disclosures to ensure that the industry is doing its utmost to safeguard consumers.”- The blog post included.

    Future of Cryptocurrency

    The World Economic Forum has stated unequivocally that the future of cryptocurrencies will be governed by regulatory outlooks and has emphasized the significance of blockchain technology in the general financial industry.

    The worldwide body claimed in the blog post that the underlying technology of encryption and blockchain has numerous uses. It emphasized the importance of experimenting in the financial services sector.

    "Countries that allow for the responsible competition will shape the future. Despite the immense harm these tools may have caused when wielded by the wrong people, cryptography and blockchains will continue to be integral parts of the modern economic toolkit," the blog post stated.

    Cryptocurrency FAQs

    What is the Internet of value in crypto?

    The "instant transfer of assets that can be stated in monetary terms through the Internet between peers without the need for intermediaries" is proposed as a definition of the IoV. The characteristics of an effective IoV are explained, as are potential enhancers of its development.

    How is cryptocurrency valued?

    The market capitalization of a coin is computed by multiplying its value by the supply in circulation. Chart 4 depicts the market capitalization of the cryptocurrencies in our study in March and May 2022. Bitcoin and Ether have by far the largest market capitalizations in the crypto markets.

    How does cryptocurrency impact the world?

    The majority of macroeconomists polled believe that cryptocurrencies and stablecoins should both play a regulated role in the economy. These digital currencies have the potential to be financial stability, equity, innovation, and market incentives for environmental sustainability drivers.