2019’s World Economic Forum on Cryptocurrency
The World Economic Forum was held earlier this month. For those who are unaware, it’s an annual meeting in Davos, Switzerland, where leaders in technology, finance, politics, academia, and more convene to talk about all things economic.
Last year’s forum in Davos was hype. Bitcoin was at $11K, and everyone who believed in the crypto was pumped for it to jump past $20K and reach well beyond.
Then 12 months passed.
Bitcoin started 2018 at $11K, ended at almost $4K, and is currently into 2019 at $3,400.
Cryptocurrency has been discussed at Davos for the past several years, so there’s no surprise it was talked about this year as well.
During the last forum, BTC was coming off one of its best years ever, and there was plenty to talk about. Discussions continued this year, but not with the zeal 2018’s forum had.
A running theme present at each forum, I’m finding, is that there are always widely varied opinions on crypto. Not a mutual agreement on the topic in sight.
Whether its cryptos’ uses, benefits, pitfalls, future, or general classification, experts and leaders have differing opinions.
Digital currency and its underlying technology have been both praised and condemned from the very beginning. It’s a conflicting byproduct of innovation, I believe.
The opinions on digital currency at this year’s forum were especially compelling. Let’s dive into the polarizing opinions leaders had on cryptocurrency at Davos.
“I do believe it will go to zero.”
There were plenty of attendees who had dismal impressions and projections for cryptocurrency in Davos this year.
When asked if “the whole thing is totally overhyped and quite dangerous,” Gottfried Leibbrandt, CEO of the global international payments system Swift, raised his hand in agreement — though he was the only one to do so.
The brilliant minds of Harvard also made an appearance in Davos this year, with professor Kenneth Rogoff taking on crypto. In the past, he’s compared Bitcoin to a “lottery ticket.”
This year, he sang a similar tune. Rogoff spoke during the “Building a Sustainable Crypto-Architecture” panel, and he believes cryptocurrencies are vulnerable to nefarious manipulation.
“If someone wants to do mischief, there seem to be ways to do it. And then who do you call? Oh, we decentralized it,” said Rogoff.
And he’s not necessarily wrong. In 2018 alone, over $1 billion was stolen from digital wallets across the globe. Since they’re decentralized, there’s nobody to call, investigate, prosecute, and retrieve the stolen tokens.
Rogoff also touched on cryptos’ lack of regulation. He thinks it’s because the transactions aren’t large enough:
This issue about evading capital controls — if it’s really small, the governments aren’t going to do much about it, but if it gets too expensive, [governments] aren’t going to like it and they can find ways to stop you from spending [digital currency].
One of the sharpest critiques of crypto came from Mark Carney, the Bank of England’s governor. He doesn’t think they’ll impact traditional financial systems. He doesn't even see cryptos as currencies — more like “crypto-assets.”
On crypto, it’s not going to disrupt, because they’re not cryptocurrencies. They’re at best crypto-assets, but they’re really not going anywhere.
Mastercard’s vice chairman, Ann Cairns, had a similar opinion: “Bitcoin behaves like a commodity; it’s unsuited right now to be a currency.”
That’s not stopping Mastercard from developing its own blockchain, with Cairns stating the credit card behemoth is currently “testing it with some of the biggest banks in the world.”
BCG Digital Ventures founder Jeff Schumacher was also present at Davos. Although he’s impressed with blockchain, he’s not too keen on crypto.
I do believe it will go to zero. I think it’s a great technology but I don’t believe it’s a currency. It’s not based on anything.
Schumacher’s take on blockchain makes sense, as BCG Digital Ventures has invested in several startups centered on blockchain.
PayPal’s CEO, Dan Schulman, is also not a fan of crypto, thinking it's “more of a rewards system for implementing blockchain” than an actual currency or store of value system.
Additionally, Schulman finds BTC inconvenient. He’s not even seeing merchants adopt crypto payments from his line of work: “We’re not seeing many retailers at all accept any of the cryptocurrencies.”
To be honest, I found this take of Schulman’s entertaining. I mean, how many people used PayPal when it debuted? Literally less than a percent of the whole human population...
Look at PayPal now — it's used everywhere. What I’m trying to get at here is that innovations and their mass adoption take time.
Given that 2018 was a terrible year for crypto, this year’s pessimistic views aren’t shocking. To be honest, I’d be shocked if there were no harsh criticisms at all.
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“It’s a really powerful innovation.”
On the other hand, some leaders at Davos had immensely great things to say about cryptocurrency.
Take Elizabeth Rossiello, BitPesa’s founder, for example. BitPesa is a platform that uses Bitcoin to transfer funds across country borders. It’s operating throughout Africa.
It abides by European Union regulations on money laundering, so users must provide their registered personal information like their full name and date of birth. They must also provide a valid source of funds for transfers.
Rossiello understands cryptos’ role in finance; it's not meant to “beat” traditional currencies, but rather to improve the financial systems they run on.
We don't want to replace the local African currencies... we want to make it easier to have African currency pairs.
Rossiello also noted how cryptocurrencies have shed their negative reputation of only being useful for funding crime, like an "assassin" on the "dark web."
Circle’s Jeremy Allaire feels the same way, except he believes government control of traditional funds is the real crook.
The biggest financial crime we have is with US Dollars — it’s a two trillion market of crime. [Out of all] the Central Bank-printed hundred dollar bills, half of them are sent overseas. I wonder who’s demanding those... Crypto is still too small, and the big guns are focused on the money that the [Federal Reserve System] is giving out to countries around the world, and that's where the problem is.
Allaire took it a step further to proclaim that crypto is “at the foundation of protecting modern society, human privacy.”
“Crypto is fundamental to the future,” he said. “We need tamper-proof, resilient, decentralized infrastructure if we want society to survive the digital age.”
Allaire even thinks crypto has a place with traditional banks. According to him, it's already starting to happen:
We’re huge proponents of central bank digital currency and we believed in that for a very long time... Our view is that the creation of cryptocurrencies that are based on central bank money is happening in the private sector first. We launched USD Coin last fall. It’s growing rapidly.
Allaire wrapped up his praise of crypto to talk about its benefits and innovative properties:
It can be used in lending transactions, in payment transactions. It allows you to make dollar payments, globally, at pennies and in seconds to minutes. It’s a really powerful innovation.
Allaire also thinks Bitcoin will shoot up in price over the next several years. According to him, its decentralized and alternative monetary value has a “very significant role” in the times to come.
While Harvard’s Rogoff does not like cryptos, he did make a point of stating that they have valid moments, like the bolivar soberano, Venezuela’s new currency that uses the Petro digital currency to boost transaction speed. The country’s going through a really tough time with hyperinflation, and it’s exploring crypto for help.
As you can see, not everyone at Davos looks down on crypto. There are plenty of leaders who still believe in it 100%.
Let’s wait and “see where the innovations go”
Like I mentioned earlier, there were certainly two different opinions of cryptocurrency at Davos this year. One side thinks cryptos are trash and on their way to the garbage can, while the other believes they will revolutionize the world and land investors fortunes.
Harvard’s Rogoff also stated that BTC has a “zero” chance at replacing traditional money. I agree with him, as I don’t believe that’s cryptos’ true use. Rather, I identify more with Elizabeth Rossiello’s stance that cryptos are meant to optimize our current financial systems, not replace them.
Like with most things, only time will truly tell crypto’s fate. Rogoff said he’s spoken with regulators, and that’s basically what they’re saying.
I guess that's all we can do in the meantime. To wait and see, that is.
The more you know,
John Butler, Jr.
John Butler is Token Authority’s contributing editor. He first learned of Bitcoin in 2010 when it was still unknown. Since then, he has seen cryptocurrency and blockchain technology swell in popularity across the globe, making innovators and investors plenty rich. Every week, he brings Token Authority readers compelling information for crypto investing.