Elaine Ramirez
China rocked the cryptocurrency world this month with a double blow to initial coin offerings and then swapped itself out for crypto. But will China’s fears of decentralized currencies spill over to the rest of the world? Not necessarily, believes Vitalik Buterin, co-creator and standard bearer of Ethereum, the second most important cryptocurrency with a market capitalization of $ 27.5 billion.
The regulations could be a long-term hurdle for China to either stay as they are or tighten further, he says. After banning ICOs and regulating exchanges, the Chinese government could even start regulating mining. However, the impact on the rest of the world could be mitigated as governments have taken different approaches to regulation, some of which are much more permissive than others, he says.
“In general, China has banned everything from ICOs to Justin Bieber, so I don’t think other governments necessarily see this as a sign that they should copy everything they do,” he said in an interview in Seoul on Tuesday. Even in China, people are avoiding the government’s watchful eye. “A large number of Chinese are already moving to Telegram [to skirt regulations]So you are definitely finding ways to get around that. “
Other governments generally take a neutral stance on blockchain technology itself and instead focus on regulating specific applications – an approach that he believes has worked relatively well. “With the exception of China, things are likely to be moving in a positive direction. The fact that [regulators] Actively examining blockchain applications in their countries is important and definitely very useful and positive. “
Countries like Singapore, Thailand and Japan are taking steps to legitimize cryptocurrencies and initial coin offerings with light regulations or to keep their hands free. “Especially in the early stages you need the flexibility to pursue bad actors without setting rules that are either too restrictive on the one hand or that anyone can easily circumvent on the other,” says Buterin.
Buterin, the 23-year-old co-creator of the Ethereum network, is in Seoul this week to meet with the enthusiastic community that has made Korea home to some of the world’s largest Ethereum exchanges. Mainstream messenger Kakao will add another one – an exchange that offers around 111 digital currencies. While the technical understanding of the underlying blockchain technology lags behind in Asia due to language and cultural barriers, the region’s interest has surpassed a hump, according to Buterin.
Indeed, despite China’s official announcements this month, the cryptocurrency craze is showing no signs of slowing in Asia. Markets rebounded from the news as South Korea outperformed China in total transaction volume. In the past few days, the KyberNetwork in Singapore has raised $ 50 million worth of Ethereum, while the ICON project in South Korea, to which the whole country is to be hyperconnected, has raised 150,000 ethers worth $ 42 million. Even the Macau games company Macau Dragon Group is trying to raise $ 500 million through an ICO in less regulated Hong Kong.
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Mainstream adoption
Buterin predicts that in just a few years, Ethereum will have the technical capacity to match Visa in terms of scope. To be clear, this doesn’t mean that digital currencies like Ethereum will completely replace the role of bank or fiat currencies. However, the global economic crisis of 2009 also showed that the fiat-based financial system needs to be corrected.
There is a role for everyone in business. Fiats ensure economic stability, while cryptocurrencies meet a proven demand for fast digital transactions without a bank account or credit card and provide economic incentives for public blockchain applications. Buterine says.
“There are good reasons to argue against the most expansive version of cryptocurrency maximalism, but I think people who are totally against cryptocurrency’s role in the economy are walking in the opposite direction,” he said at a news conference on Monday in Seoul. “It is definitely not true that the financial system as it existed in 2009 will continue to exist in the future without major, substantial structural changes.”
In the short term, Buterin believes that the divide between the crypto economy and the rest of the economy is a good thing as it allows developers to innovate and sometimes fail without worrying about hurting those who don’t Are part of the “experiment”. But once banks become more involved, the paradigm that will work for blockchains is unlikely to align with that of traditional centralized funding, which focuses on a small number of banks.
“In the long term, I expect cryptocurrency to fundamentally change a few things in terms of how finance and the Internet work. This makes financial systems look more like the internet in terms of how accessible they are and how easy they are to interact, for example, ”he said.
Plug holes
Elaine Ramirez
Before such a mainstream takeover can take place, a few hurdles remain, including mining resources, transaction capacity and, perhaps more importantly, security. Multi-million dollar hacks are not uncommon. More than $ 40 million was stolen from the network in July.
“It is entirely possible to develop a system that is as scalable as Visa, but that is completely unsafe. Number one, in order for users to use it, it has to be scalable enough to support their use, ”he said. “Number two, there have to be other things like security and privacy that people care about. I think all three are important challenges that we need to work on. “
For this effort Buterine Changes to the Solidity programming language, coding standards, and base protocol have been identified that make it easier to write error-free, secure smart contracts. Decentralizing efforts over time will continue to be central.
“We will be very focused on further research, focusing on improving scalability solutions and improving data protection solutions,” he said. “I think we’ve done a lot of work bootstrapping the community, but as time goes on, bootstrapping yourself will get better and better.”
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