In 2024, the “summer of crypto assets” will arrive. This time it’s different. | CoinDesk JAPAN

Looking back at my past predictions for the future, it is clear that I expressed a lot of wishful thinking. Like Oscar Wilde, who once said that he could resist anything but temptation, I can predict anything, unless it concerns the future.

Although my predictions about what would happen that year were often wrong, I think some key predictions were directionally correct. Nor is he content to remain on the sidelines. I am building blockchain business and technology with the express purpose of influencing its future path.

The future I am building is one built on a public Ethereum ecosystem with robust, compliant business transactions and meaningful privacy protections.

This open, censorship- and monopoly-resistant model allows for the creation of a kind of universal business infrastructure that makes business interactions simple, scalable, and reliable.

In this vision of the future, financial services can be easily integrated and serve their original purpose of channeling money to useful projects, from startups to green energy projects.

The journey to this point has been much slower than I would have liked, but the progress is real. In the 10 years I’ve been in this field, including eight years as Global Blockchain Leader at EY, companies have embraced tokenization, Ethereum has become the global standard, and Ethereum has become the global standard. The permissioned chain trend is slowly dying down, although it hasn’t disappeared.

Businesses are also increasingly accepting crypto assets (virtual currencies) alongside fiat currencies, and the ecosystem has largely overcome scalability challenges through Layer 2.

Zero-knowledge (zK) proof tools and applications are also making incredible progress in solving privacy challenges.

Much of this progress came during the dark days of the “crypto winter,” as it has in the past. We’re not completely out of winter yet, but I’m hopeful that it won’t be long before we do.

Indeed, we see the gradual implementation of the MiCA (Markets in Crypto Assets) regulation in Europe from June 2024 as an important milestone heading into the next blockchain summer.

I have three hopes for the coming summer, let’s call them “predictions.”

sustainable summer

The first is that this summer will be more sustainable. Macroeconomic changes have certainly influenced the past blockchain summer, with ecosystems like Ethereum hitting capacity limits and generating high fees, numerous frauds, and institutional capital He believes other issues, such as pool limitations, had a far greater impact.

But this time might be different. Layer 2 gives Ethereum enormous capacity, allowing regulators around the world to open up capital flows to institutional investors such as pension funds, while providing investors with additional protection from lag pull and fraud. .

While these measures are still in their infancy and there is no such thing as a fraud-free and risk-free financial ecosystem, next summer Ethereum and crypto assets will look and feel much like other financial ecosystems.

Convergence of stablecoins and CBDC

The second prediction is that central banks around the world will begin to converge on both regulated stablecoins and CBDCs as the preferred approach for implementing central bank digital currencies (CBDCs). This is not the result of regulators suddenly embracing decentralization and separate control; it is simply a pragmatic choice.

Currently, almost all CBDC plans are connected to a tokenized, centralized system. As a result, central banks are finding that while CBDC prototypes and pilots work, their technological value-add over existing RTGS (Real Time Gross Settlement) systems is quite limited.

None of the ways to fix these shortcomings seems very appealing. It seems like a tremendous technological challenge for central banks to build a fully programmable and open system comparable to Ethereum, and deploying a single national coin on a public network is a potential challenge. poses a risk of hacking.

There may also be cases where public sector managed CBDCs are promoted and offer a compelling value proposition. Such cases will be most high-profile in countries that have not yet introduced instant payments (of which there are not many) or where governments want more (and lower-cost) competition in the consumer payments space. I think it will be.

The global consumer payments market is highly consolidated, and in many countries, such as the US and Canada, payment fees seem significantly higher than in lower-cost, more advanced examples such as Australia.

Despite these challenges and the lack of a clear value proposition, many central banks seem determined to implement both retail and wholesale CBDCs.

To be honest, I don’t understand what’s driving this movement. But I’m starting to think that the push for CBDCs may have more to do with gaining more power and control over the financial system than solving a really big problem.

Even with CBDCs, I think there will also be regulated stablecoins. CBDCs are unlikely to dampen the demand for blockchain-based programmable currencies that can be used to purchase DeFi services or digital assets.

Progress in industrial applications

Finally, we look forward to continued progress in industrial applications. This is the slowest and least glamorous progress, but it is happening. Companies are easily spooked by scandals like the one that occurred with crypto exchanges, but I hope to see a steady re-acceleration of adoption as memories fade and solutions improve.

I can’t promise that summer will arrive in 2024, but the scent of spring is definitely in the air.

｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Image: Shutterstock
｜Original text: In 2024, Crypto Summer Is Coming, and This One Will Be Different