The current state and future potential of blockchain and cryptocurrencies were the focal points of a panel at this week’s Global Financial Leadership Conference in Naples, Fla.
The panelists were Arthur Hayes, co-founder and CEO of BitMEX; Dan O’Prey, chief marketing officer at Digital Asset; and Alexis Ohanian, co-founder and executive chairman of Reddit and co-founder of Initialized Capital. The moderator was Laura Shin, producer and host of the “Unchained” podcast.
Here are some of the highlights:
- The panelists agreed that cryptocurrency is a long way from being a significant asset class, although Hayes said he sees a chance of that changing within the next 10 years. He said the new products that are emerging from traditional financial institutions likely began in the fall, but he doesn’t see that as a “verdict on bitcoin being any better or worse right now.” O’Prey noted that enterprise software “takes a long time to do right” if institutions are taking a long-term view and building the infrastructure necessary to allow the access that customers are demanding.
- "I deeply believe this is a worthwhile investment to be making now,” Ohanian said, because the “charlatans” have been frightened away from cryptocurrency and “smart and driven” people are working in the space. Hype about blockchain is an issue, because “people will just try to shove blockchain into anything where it doesn’t actually make sense,” Ohanian said, so Initialized Capital’s first question in response to a crypto pitch is whether a blockchain is necessary or whether a standard database will suffice.
- O’Prey said the hype is beginning to dissipate and that “real” projects are emerging, often more quietly. One example is the Australian Securities Exchange’s replacement of its post-trade system for equities with distributed ledger technology, which shows a focus on business problems that are realistic to solve, he said.
- Many of the products touted as being decentralized actually aren’t, meaning they’re often “just a way to get money from people who don’t know … what’s really going on behind the scenes,” Hayes said. “I think we have a long way to go before we get to this utopia of decentralized application,” he said. The panelists said user experience is key, regardless of whether a product is decentralized.
- On the topic of tokenized securities, Ohanian said he wants the Securities and Exchange Commission to develop “really thoughtful regulation” that would enable activity in the space. He said he’s excited about their potential in the long term. Hayes, meanwhile, said he doesn’t “see how retail investors … are going to get excited about an equity that just looks a little bit like a digitized token.” They could be heavily regulated, leading to high legal costs that could be a barrier, he said.