Cryptocurrency utopia only possible in a regulated environment
Cryptocurrency can only go mainstream and deliver on its full potential when regulators embrace it.
Despite the views that cryptocurrency is simply a good way to prevent governments from interfering with people’s money; cryptocurrency will really only go mainstream and deliver on its full potential when it is legitimised and embraced by regulators.
This is according to Lorien Gamaroff, CEO at Bitcoin cash wallet and payment ecosystem company Centbee, who was speaking on day two of the Finance Indaba Africa 2018 in Sandton.
Lorien, recognised as South Africa’s foremost blockchain expert, drew a full house for his talk on cryptocurrencies within a regulated environment. He noted that there were differing schools of thought around whether cryptocurrencies should be subject to regulation by governments, which cryptocurrencies were best, and whether the basis of cryptocurrency should be flexible, or set in stone.
“There’s been a lot of excitement around cryptocurrency, and it’s been a bit like a big casino or lottery until now, but over time we will start settling down and using it. I look forward to a world in which we don’t just speculate on these currencies, but we actually use them in our day-to-day lives. I see a world where things converge.”
He continued, “I believe the only way cryptocurrency will reach mainstream adoption is if it achieves sound and stable money status by putting the rules in place and making sure those rules never change – in the same way as the protocols that define the internet itself have not changed. Crypto won’t succeed in spite of governments, it’s going to succeed along with them,” said Lorien.
“For business there is regulatory uncertainty around cryptocurrency, so it is largely still a grey zone to them. Merchants are concerned – is it a scam? Is it legal? So this has been an unfortunate anchor cryptocurrency people gave had to drag along. But I see a bright future for cryptocurrencies.”
He reports that regulators are not loath to look into the possibilities presented by cryptocurrencies.
“In South Africa, the Reserve Bank is quite excited about it. Free and unregulated bitcoin is a nice ideology for some, but I believe government and regulators will come aboard, and the sector will become regulated in future. This will give clarity in the environment and businesses and innovators will start adding value, which will take it mainstream.”
Lorien added that one area set to appeal to governments are smart contracts – units of business logic operating on top of blockchains. “SARS is going to love bitcoin because what merchants will start doing is allow people to pay them through a smart contract, and this will allocate tax accordingly, so tax would be settled immediately. This would be a boon for merchants in reconciling their taxes, while the authorities would get paid tax without any bother,” he concluded.