Exclusive: How Traditional Finance Can Help Crypto to Gain Trust and Adoption?

By Matthew Lam   Jul 08, 2019 4 Min Read

How traditional finance can help crypto to gain trust and adoption? Spoken in Next Block Asia, Bangkok, Matthew Lam of Blockchain.News moderated the panel discussion and shared his insights with the following speakers:

1. S. Daniel Leon, Co-Founder of Celsius Network

2. Tim Scheffmann, Regional Managing Director of Everex Global

3. Sonny Mohanty, Business Development Manager of LATOKEN

4. Manindra Majumdar, Founder and CEO of XR Web

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Lack of Trust in Crypto, but WHY?

Matthew first raised the question on why crypto remains low trust and adoption in the traditional financial market. Tim believed that the culprit being lack of KYC on cryptocurrencies, which results in low trust and adoption among banks. However, he observed that some crypto exchanges are enhancing KYC procedures which they require customers to provide address or billing proof and that helps crypto to gain trust.

Daniel highlighted that crypto won’t gain mass adoption until U.S. SEC provided a much clearer regulatory guidance on cryptocurrencies. He noticed that banks like JP Morgan are actively exploring blockchain technology. These banks hired bunch of blockchain developers and Daniel believed that banks are using blockchain for internal costs efficiencies, instead of passing on the benefits of blockchain to general public. Tim believed that prior to providing clear regulations, some regulators like Myanmar need to improve their capabilities and understanding on crypto.

Catalyst for Crypto Mass Adoption?

Matthew noticed that crypto nowadays are not widely accepted as means of payment. He then led the discussion by suggesting potential catalysts for crypto mass adoption: i) Scalability of crypto is much improved to serve as payment medium; ii) Approval of Bitcoin ETF; iii) Proper regulation is in place for Facebook’s Libra coin.

Daniel added that apart from the 3 reasons, good storage of value is essential for crypto mass adoption. People will start using crypto if the volatility of crypto is much lower in future. Tim agreed with quoting a documentary on CNBC’s reporter living on Bitcoin only for a week. It turned out that the cost of living with Bitcoin is 40% higher than spending in fiat currencies. This indicates high volatility of crypto where crypto are not good storage of value currently.

In terms of merchant adoption, Tim added that easy conversion between fiat and crypto is essential for merchants as it is complicated for merchants to record the value of crypto on their balance sheet.

Manindra added that enhanced user experience on crypto will be another catalyst for crypto mass adoption. Enhanced user experience can be a result of improved user interface, where users don’t need to bother managing private keys. Enabling QR codes is another way for Dapps to leverage crypto as payments, which facilitates instant money transfer and thus more merchants will accept crypto in future. Moreover, education to the backend team is needed to enrich user experience on crypto, with issues such as how to deal with the anonymity and hedge the price risks of crypto.

Facebook Libra: Gateway for Crypto Mass Adoption?

Daniel is optimistic that Facebook Libra can gain mass adoption unless regulators halt the launch of Libra. He added that in theory Facebook can print as much Libra coin as they want and this is inconsistent to central banks who are supposed to control the money supply. That’s the first regulatory concern governments are looking at Libra.

Daniel added that with 2.7 bn monthly active users, Facebook will first target the unbanked and ultimately, capturing the retail marketplace and becomes a strong competitor of Amazon. Sonny agreed with Daniel’s view and she added that merchants are likely to use Libra in Facebook’s marketplace which they can convert Libra and any fiat currencies conveniently.

Tim believed that the adoption of Libra will first extend to the banked population, where people are educated and understand the basics of digital payments. He thought that cross border payment using Libra will be a huge use case. For the unbanked population, Tim added that education and gain the trust of the unbanked can be time-consuming. However, once these 2 steps are completed, Facebook can capture the unbanked population easily as their network already secured a number of business and e-commerce partners.

The Killer dApp in Traditional Finance?

In summing up, Matthew raised an interesting question to panelists: What is the killer dApp in financial markets? The panellists have their say:

“Celsius Network can be the killer dApp which users can earn up to 10% interests in lending crypto. Besides, the dApp has to be easily manageable as apps in traditional finance and banking.”

S. Daniel Leon, COO of Celsius Network

 

“A QR code serving all instant payments between crypto and fiat currencies is the killer dApp. Such dApp can be useful in fragmented market of South East Asia where there are more than 90 mobile money apps.”

Tim Scheffmann, Regional Managing Director of Everex Global

 

“An one-for-all payment dApp with instant cross border transfers is the killer dApp.”

Sonny Mohanty, Business Development Manager at LAToken

 

“An dApp facilitates online shopping and cross border payments with a few clicks is the killer dApp.”

Manindra Majumdar, CEO at XR Web

Thumbnail image credit: Shutterstock


About the author

Matthew Lam
I believe the true value of cryptocurrencies is the underlying blockchain technology. The development of CBDC, DeFi, blockchain standardization are the key trends to watch in 2020!




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