After the crypto crash, here’s what industry experts are waiting for next

Cryptocurrency firms dominated the primary avenue on the World Financial Discussion board in Davos this 12 months, a notable distinction between this version and the final one in 2020.

The high-profile presence from the trade got here even because the cryptocurrency market crashed. It was sparked by the collapse of the so-called algorithmic stablecoin known as terraUSD or UST, which noticed its sister token luna drop to $0 in Could.

In the meantime, world regulators are setting their sights on the cryptocurrency trade.

WEF is the annual gathering of world enterprise leaders and politicians that goals to set the agenda for the 12 months.

Towards that backdrop, it was the right time to meet up with a few of the massive gamers within the cryptocurrency trade. Here is what I realized.

There are at the moment over 19,000 cryptocurrencies and dozens of blockchain platforms in existence.

Blockchain is the know-how that underpins these digital currencies and platforms embrace Ethereum, Solana and plenty of others.

Most of the trade executives see the present state of the market as unsustainable.

Brad Garlinghouse, CEO of cross-border blockchain agency Ripple, predicted there might solely be “scores” of cryptocurrencies left sooner or later. He mentioned there are round 180 fiat currencies on the earth and there’s not likely a necessity for that many cryptocurrencies.

Betrand Perez, CEO of the Web3 Basis, likened the present state of the market to the early web period, and mentioned there have been numerous “scams” and plenty of “weren’t bringing any worth.”

Brett Harrison, CEO of cryptocurrency change FTX U.S., mentioned there are “a few clear winners” on the subject of blockchain platforms.

You will have heard of stablecoins. They seem to be a sort of cryptocurrencies that are presupposed to be pegged to an actual world asset.

In apply, stablecoins like tether or USD Coin, which purpose to reflect the U.S. greenback one-to-one, are backed by actual belongings comparable to currencies or bonds. They maintain a reserve of those belongings to be able to keep a greenback peg.

You will have additionally heard in regards to the debacle surrounding a terraUSD or UST. It is a so-called algorithmic stablecoin. As a substitute of sustaining its peg by having a reserve of belongings, it goals to imitate the U.S. greenback and keep stability through a complex algorithm.

But that algorithm failed and caused terraUSD to lose its peg and collapse.

The crypto industry tried to warn users to make sure they know the difference between an algorithmic stablecoin, like terraUSD, and others that are backed by assets.

The terraUSD collapse “made it very clear to people that not all stablecoins are created equal,” said Jeremy Allaire, CEO of Circle, one of the companies behind the issuance of USDC.

“And it’s helping people differentiate between a well-regulated, fully reserved, asset-backed dollar digital currency, like USDC, and something like that (terraUSD).”

Reeve Collins, co-founder of BLOCKv and co-founder of another stablecoin tether, said the terraUSD saga will “probably be the end” of most algorithmic stablecoins.

Believe it or not, the cryptocurrency industry welcomed the recent market crash, which saw major tokens like bitcoin fall more than 50% from their all-time highs.

This sentiment was echoed by other executives too, who say the massive rally in prices caused people to focus on speculation rather than building products.

″[The] market, in my personal opinion, became maybe a little bit irrational, or maybe a little reckless to a certain extent. And when the times like that come, [a] correction is normally needed, and at the end of the day [is] healthy,” said Mihailo Bjelic, CEO of Polygon, //descriptor please///.

Ahead of the World Economic Forum, European Central Bank President Christine Lagarde said she thinks cryptocurrencies are “worth nothing.”

It appeared to me like regulators and authorities were still antagonistic to cryptocurrencies, much like they had been over the past few years at Davos.

“I think it’s constantly changing both regulators, big enterprises. Everyone wants to be more more involved with crypto now, no one is ignoring the industry anymore,” Polygon’s Bjelic said.

In March, U.S. President Joe Biden signed an executive order calling on the government to examine the risks and benefits of cryptocurrencies. Still, there is no major cryptocurrency regulation in the U.S. and other major economies.

Garlinghouse said that he wants “clarity and certainty” from regulators.

BLOCKv’s Collins, meanwhile, called Lagarde’s comments “ignorant.” He highlighted the tension that still exists between the cryptocurrency industry and some authorities in traditional finance.

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