Do world leaders and CEOs need to pay more attention to blockchain and cryptocurrencies?
Blockchain is a foundational technology that we see as having really great promise to create a lot more efficiencies in global trade,” said Nasdaq CEO Adena Friedman when asked by Maria Bartiromo of CNBC if she believes in blockchain in a special interview on the sidelines of the 48th Annual Meeting of the World Economic Forum in Davos, Switzerland.
Friedman, who made the distinction between blockchain and Bitcoin and other cryptocurrencies, added that the exchange is in an “exploratory phase” of launching a Bitcoin futures contract.
PayPal COO Bill Ready also agrees and sees better long-term potential in the blockchain technology, as he explained to Bartiromo.
“As an engineer by background, the blockchain technology that Bitcoin sits on top of is a fundamental breakthrough in computer science and so there’s tremendous long-term opportunity,” he said.
Blockchain is under scrutiny in Davos, with at least two events focusing on the blockchain technology and cryptocurrencies — from one titled ‘The Crypto-Asset Bubble’ to a few others on the digital economy and emerging technologies.
The distinction that Friedman made is key to better undestand how Davos is approaching blockchain, as much of the attention is towards Bitcoin and other crypotocurrencies.
“The world’s big financial institutions are wrestling with a cryptocurrency dilemma: whether to stand by and denounce a technology many distrust but also fear — or join those investing in it,” writes The Financial Times in an article titled ‘Blockchain can no longer be ignored’.
The paper cites Richard Crook, head of emerging technology at Royal Bank of Scotland: “Because blockchain’s benefits come from decentralisation there is little point replacing one technology with another without changing the business model.”
Part of the discussion is also about regulations.
“We can’t deny that things are changing,” Benoit Legrand, chief innovation officer at ING told FT. “The world will include cryptocurrencies in the way we work in the next 10 years. But it needs to be regulated. This is absolutely key.”
According to Finance Magnates, however, there’s still a great deal of reticence.
“Axel Weber, chairman of UBS, a Zurich-based financial services company for high net worth individuals, said at the event that his firm advises clients not to invest in the assets,” the paper reported.
Nobel Prize-winning economist Josef Stiglitz seems also not a big fan and warned Switzerland and other countries not to embrace cryptocurrencies too warmly, fearing they will be used for illicit purposes.
Pressed about it during a Bloomberg Television interview from Davos, Stiglitz explained that Bitcoin is attempting to solve a problem that never existed.
“We have a good medium of exchange called the dollar: we can trade in that,” he said emphasizing that the global banking system is already moving toward secure digital payments. “Why do people want Bitcoin? For secrecy.”
He added: “My feeling is that when you regulate it so that you couldn’t engage in money laundering and all these other things, there would be no demand for Bitcoin. So by regulating the abuses you are going to regulate it out of existence.”
World leaders gathered in Davos are expressing interest in blockchain.
French President Emmanuel Macron while not mentioning blockchain explicitly said in his speech in Davos that “big technological changes” are among the global challenges that scare the international community and thus impose a better international coordination and debate.
On a une stratégie aujourd’hui mondiale totalement non coopérative sur ces sujets! [On this subject, the global strategy today is completely non cooperative!]
Addressing the challenges created by the surge of Bitcoin and cryptocurrencies, Macrom said that the current international financial system is not equipped to face those issues.
“We have to launch this discussion in the framework of the G20,” he said mentioning the important leadership of Argentina President Mauricio Macri, rotating chair of the G20 for 2018.
UK Prime Minister Theresa May, in a speech very focused on the future of technological advances and the many opportunities they create, said that technology continues “to revolutionize the possibilities for humanity and we must have the international frameworks in place to ensure everyone can benefit from them.”
While never mentioning excplicity blockchain, Bitcoin, or cryptocurrencies, she acknowledge that “many leaders this week are setting out defenses of globalization, open economies, free trade and technological progress — while grappling with how to ensure these operate fairly for all our countries and all our people.”
The test of leadership, however, is what action we take.
US President Donald Trump, who also attended the World Economic Forum in Davos, and the White House “don’t have a formal position on blockchain currencies and cryptocurrencies,” as explained back in December 2017 by Homeland Security Advisor Tom Bossert during a press briefing, adding that they show “great hope and promise” but also They also “security risks and concern.”
In Davos, Trump met with May and Israeli Prime Minister Benjamin Netanyahu and, according to readouts, they did not discuss technology issues.
Netanyahu, in particular, is a big proponent of blockchain and Bitcoin, and even warned that banks will eventually disappear, potentially because of the emergence of this technology and cryptocurrencies.
Back in December he said: “Is the fate of banks that they will eventually disappear? Yes. The answer is yes. Does it need to happen tomorrow? And do we need to do it through Bitcoin? That’s a question mark.”