We are going to see more pilots and proof-of-concepts in the payments space since it is the most obvious low-hanging fruit ripe for disruption. Legacy payment networks are expensive for end-users and with increased competition from FinTechs such as Transferwise, AliPay, etc. banks are losing revenue from a business that has razor thin margins. While we see this as a welcome development in terms of blockchain adoption, banks have not had the greatest track record in building innovative technologies. Other pure play crypto-payments players such as Ripple, Wyre, Veem are likely to gain more legitimacy in light of this “pilot”.
Analysis - Provenance has been a contentious use-case for blockchain as was evidenced by Terence Evidence registering as the owner of the Mona Lisa (He is not the actual owner but the records on a blockchain are immutable. So is he now the owner then? Someone better get started on the Eiffel Tower.) Once again, this is a case of irrational exuberance behind blockchain tech. The ability to have a single source of truth to track an item is definitely a problem worth solving. However, we see the issue here as a data-input problem and not as a database-design problem. So, you can build the fanciest blockchain but what happens when the data is wrong or worse, falsified ? Remember - Immutable records, can’t change them.
Analysis - We view this as a blatant attempt to incorporate blockchain where the use-case does not need one. Juventus, following the announcement from Paris Saint-Germain, have announced their “intent” to launch a token to give fans a “voice”. The tokens would be distributed through a Fan Token Offering (Analyst’s note: smh) to enable fans to vote on over their upcoming mobile app on club issues. Here is the problem, why do you need a token to vote over the mobile app ? Any Product Designer with a half decent understanding of UX will immediately see the added friction - go to an exchange, buy token, trade-in aforementioned token and then caste a vote. All of this to feel “more close to the team”. Irony! Here is an idea: Why don’t you just use the app to let people vote without the token?
The pro-cryptocurrency stance of these bills are encouraging and could help prevent regulatory uncertainty for tech companies and investors and looking to invest in those companies, thus providing more access to capital for the industry. Regulation at the federal level could also make regulation more consistent, as blockchain companies currently have to comply with each state’s individual laws (if any) to operation nationwide. However, these bills are still in their infancy stages and much could change by the time they are passed.
An interesting aspect of this report is the finding that markets sometimes react favorably to cryptocurrency regulation. This may be surprising to some as many commentators have predicted that regulation will be the downfall of cryptocurrencies. The right type of regulation that is not too burdensome can add legitimacy to cryptocurrencies, thereby making it more mainstream. At the same time, the report found that market prices drop twice as much in response to negative regulatory news (-3.12% in 24 hours) as compared to the increase in response to positive regulatory news (+1.52% in 24 hours).
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