The year is 2017. Cryptocurrencies and their underlying blockchain technology are sternly poised to take over the world. Investors, all around the globe, have poured as much as $6.2 billion into 875 crypto startups. Bitcoin booms drastically and new coins took the stage. However, the very next year, the market crashes. In between 6th January to 6th February 2018, the price of bitcoin drops by 65%. By September, the crypto world has collapsed 80% from its peak in January, making that year’s cryptocurrency crash far worse than the dot-com bubble’s collapse of 2004.
Blockchain, surprisingly, survives. It doesn’t crash along with it. On the contrary, the temporary fall of cryptocurrencies forced the blockchain realm into a world of true innovation and product development. Standing today, blockchain re-imagines a world full of incredible possibilities. Now, not only major industries like finance and energy are exploring exciting ways to leverage blockchain, but it’s also being said that this technology can give our traditional fiat currencies some unprecedented “super powers.” At least, so is the belief of Jeremy Allaire, CEO of Boston-based P2P crypto trading firm, Circle.
In a series of interviews over the last week, Allaire touched upon the current state of cryptocurrencies, envisaged the power of fiat-backed USD Coins (USDC), controversies around Facebook’s Libra, and the shape digital currencies are likely to take in our economic future. He justly explains how a digital version of the USD adds to transaction speed, security, and cost-effectiveness, while still being completely backed and reserved by central banks. His idea incorporates “all the benefits of price stability and the underlying price characteristics but with the power of the internet.” He also believes that while Bitcoin is competing with the likes of gold, digital versions of popular reserved currencies would transform the way we view everyday payments, seamless global transactions, and socio-economic relationships at a global scale.
Allaire also emphasizes China’s effort in creating a central bank-led digital currency (CBDC) that might propel the yuan to be renowned worldwide as a global reserve currency. For him, China’s foray into the digital currency domain heralds a pioneering step for the proliferation of CBDCs, which, in return, would make way for interoperability between the CBDC and Circle’s very own USDC—a stablecoin pegged to the U.S. dollar. Some of the crucial capabilities of the CBDC, as Allaire feels, is its ability to “go anywhere the internet can reach.” This sentiment echoes that of Changchun Mu, the head of China’s digital currency, who recently claimed CBDC of having similar qualities to that of Facebook’s Libra; including interoperability across major Chinese platforms, such as Alibaba and Tencent.
Further, he added,
“While accounting for his views on Facebook’s proposed cryptocurrency—Libra—Allaire asserts that he finds this project exciting, ambitious, and most importantly of huge potential. “It’s a huge step forward for how billions of people can exchange value around the world.”
Some of Allaire’s predictions have really high possibilities of coming true, sooner or later. He draws examples from the rise of the internet over the past 20 years how development in infrastructure has had direct transformational outcomes on media, communications, commerce, and retail. And currently, we’re merely at a juncture where the blockchain revolution is just beginning.