FINWISE SUMMIT HIGHLIGHTS: DISRUPTION IN FINANCIAL INDUSTRY AND NEED FOR COLLABORATION
By Kenny Au — June 8, 2018
The recent FINWISE Summit in Tokyo brought together experts in the areas of banking, consulting, blockchain and other Internet organizations to explore the growth of cryptocurrency exchanges and the inevitable ramifications for the global financial technology industry. Moderated by Kenny Au, co-founder of Luxchain and blockchain columnist, the panel of blockchain superstars included Eric Gu, founder of Metaverse and RightBTC, Oliver Truquet, President of the Fudan Blockchain Association, and Karen Chen, former president of UBS (China) and current CEO of Higgs Block, a Singapore-based blockchain company and cryptocurrency exchange called Coinsuper.
The panel weighed in on the coming changes that blockchain will bring, and the need for greater education, participation, and normalization. Under discussion were April’s crypto market cap high of $400 billion dollars and predictions for its ongoing rise. Chen noted that as large as this figure is, it only accounts for about 0.2% of total investable assets within the traditional centralized financial industry, indicating that crypto exchanges are poised for extensive growth and expansion in the future.
“There is enormous possibility here. It’s a new trend in financial development,” Chen said. “If a connection to the financial world can be established by blockchain, then this could be a huge opportunity for us to grow.”
Truquet summarized the primary limitations facing the crypto industry in three points:
· Lack of cryptocurrency and blockchain education
· A great deal of speculation surrounding the crypto industry
· Lack of participation — even from regular investors
At the same time, Truquet points out, the flip side to these challenges is that they are also indicators of areas in the space that are ripe for development and ramping up user involvement. None of these challenges are without solutions, as the panel took time to explain.
Cryptocurrency & Blockchain Education
Gu and Truquet discussed the importance of developing a viable educational platform for potential investors to learn more about cryptocurrency and blockchain. Gu related some of his experiences with traditional trading platforms and their commitment to ensuring that users receive both a fundamental understanding of trading and an explanation of effective ways to participate. Gu went on to explain that these platforms required him to fill out a form indicating his level of risk tolerance, familiarity with trading, and his investment background. Traditional trading platforms use these details to collect information on their users in order to customize the required level of available education.
“These trading platforms have mock trading features and other tools to educate users,” Gu pointed out. “Crypto exchanges need to be just as dedicated to educating and protecting their investors.”
Speculation is Common
Increased education for users and investors would also help eliminate much of the speculation around cryptocurrency. Earlier this year, the crypto market exhibited significant fluctuations. One of the reasons for the dips was speculation from parties that were not in favor of cryptocurrency. When Bitcoin first exploded on the scene, it enjoyed a huge influx of investors, many of whom lacked rudimentary awareness of how the digital monies actually worked. Exchanges also failed to educate users. When new investors began to see the fluctuations in cryptocurrency — something that experienced investors are accustomed to — there was mass panic that led to sharp decreases in the value of various cryptocurrencies.
In order to avoid a repeat of these types of downturns, cryptocurrency exchanges need to work together, Chen added. She explained that every exchange has their strong points and their areas of weakness. If all exchanges were to standardize their processes, the crypto industry could reach its desired growth rate sooner than expected. For instance, each time users sign up witha new cryptocurrency exchange they must answer the same verification questions; this can become repetitive and inconvenient.
A Lack of Adoption
The shortage of adequate education, the relative newness of cryptocurrencies, and — in large part — the uncertainties that speculation brings have continued to limit participation in the crypto markets. Even risk-tolerant investors would like to see greater stability, more predictable pricing free of speculative forces, and greater coordination or cooperation in the community.
Blockchain is the Answer
Each digital currency has its own exchange for trading on, necessitating a smooth, safe and convenient way for users to switch between platforms — and a decentralized identity system. According to Gu, if users could store their verified identity information on the blockchain, in the form of a Digital ID, and if exchanges were to construct a system allowing users to present their Digital ID when signing up to a new platform, exchanges could provide a far more cohesive and expedient process for investors.
Gu refers to this as zero-knowledge proof technology, a method for allowing users to operate on multiple exchanges without going through the same Know Your Customer (KYC) and Anti Money-Laundering (AML) measures each and every time. Metaverse is currently working on making this a reality, allowing cryptocurrency traders around the world to simply but powerfully trade their currencies. Innovation and industry-wide exchange participation like this could push the cryptocurrency industry into overdrive, truly making it the disruptive sector it is positioned to become.
The panel highlighted on several levels that the crypto industry is headed in the right direction for empowering and educating users, simplifying processes, and eliminating barriers. If the steps outlined by the experts at the FINWISE Summit are implemented, and crypto exchanges combine forces for greater clarity and coordination, today’s disruption could result in users around the world realizing the promised financial benefits of cryptocurrencies. It is up to leaders within the crypto and blockchain industry to rise to the occasion and collaborate in order for the bigger and better to come.