New York, New York–(Newsfile Corp. – December 20, 2021) – Recently, an important online meeting was held by Alchemy Pay. During the meeting, Simon Johnson, a former Chief Economist of the IMF and now Professor of Entrepreneurship at MIT, expressed conviction in the future of stablecoins in a recent discussion about decentralized finance. In conversation with Alchemy Pay’s CEO, John Tan, Johnson cited the cheap, borderless transactions stablecoins offer to global technology companies like Google and Meta. He said, “I think big tech will be drawn to stablecoins – which are not the same as central bank digital currencies.” CBDCs, controlled by national governments, will not offer the same borderless appeal to the internet economy in which companies conduct business globally. Johnson added, “I think stablecoins have a big advantage over CBDCs if they organise themselves properly.”
In the online meeting, Tan was representing the Blockchain Infrastructure Alliance (BIA) which was recently founded by the blockchain networks; Alchemy Pay, Polygon, NEO, NEAR, and Conflux. The organisation seeks to optimise decentralized finance through the funding of blockchain research, projects, and initiatives. The exchange was the first in a series hosted by the BIA, which aims to encourage social awareness and debate about the potential impact blockchain can have on finance and society.
In the past few years, stablecoins, such as Tether and USDC, which leverage blockchain technology, have emerged as a major part of the cryptocurrency economy due to their ability to facilitate cheap and instant transactions across borders while remaining tied to the value of fiat currencies, like the dollar. Despite the disruption this brings to global finance, Johnson was not concerned for the future of stablecoins. When asked about the possibility of heavy regulation he said, “I don’t see any attempts to outright ban them.” Tan explained that by bringing together the members of the BIA they intend to create a platform for constructive discussion between the industry and regulatory bodies around the world.
In 2018, alongside fellow MIT professors like Gary Gensler (now SEC chair), Professor Johnson co-authored an influential paper entitled, “The Impact of Blockchain Technology on Finance: a Catalyst for Change.” As an expert who has now spent years working towards a more socially conscious financial system, Johnson was encouraging about the mission of the BIA. Johnson told Tan the BIA was forcing traditional finance and big tech to improve what they are offering society, “The really good thing about what you and your colleagues are doing is you are putting pressure on the big finance companies and big tech companies to really up their game.”
Although it is clear the payment space is profoundly changing, it remains to be seen whether it will be dominated by the current banking sector or new centralized intermediaries, or genuinely decentralized systems like bitcoin. Johnson described bitcoin as “completely and totally decentralized” but observed it had so far failed to materialise as a means of exchange. Nevertheless, on the topic of peer-to-peer transactions, Johnson described the case for their emergence as “fairly obvious and compelling.” Alchemy Pay is focused on making cryptocurrency function as a currency, and has established a payment solution that integrates crypto and fiat for low cost and instant transactions.
When asked by Tan about what he sees as the major obstacles to the adoption of DeFi, Johnson’s answer revolved around consumer confidence and regulation. He said although people may be aware that DeFi can offer great returns on investment they are still cautious of new financial instruments. The public needs time for confidence to build and to see the sector come through times of stress.
The BIA is focused on identifying and overcoming obstacles that hinder the development and growth of blockchain finance. By bringing together principled leaders of the industry, the belief is that the public will be reassured, leading to faster adoption. In terms of regulation, Johnson said that while “crushing rules should not be imposed” he thinks the DeFi industry “must come within regulatory perimeters in a reasonable way” if it is to become a force in society.
These will no doubt become ever more important topics for social debate in the coming years as blockchain emerges as a catalyst of major change. The Blockchain Infrastructure Alliance may be focused on the ethical benefits of decentralisation but it is also up to society, as a whole, to work towards a fair and transparent financial system that improves people’s lives.
The full discussion between Professor Johnson and John Tan can be viewed on YouTube.
The views, suggestions, and opinions expressed here are the sole responsibility of the experts. Do your own research before making a financial decision related to any crypto company or asset.
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