towards a new crypto era

The crypto era – a paradigm shift

Crypto – as a technological innovation – is a tool to free the individual from the rent of digital mega-corporations and big banks. Just as the internet has succeeded in democratizing information, cryptos generate a new relationship with value. By building trust through technology and no longer through intermediaries, everyone can now keep their own wealth, money and possessions. Cryptos enable horizontality in traditionally vertical and generally anti-grassroots economic relationships.

Called “crypto-currencies”, then “crypto-assets”, “cryptos” are protean objects that are difficult to define because their uses and functioning vary. The “crypto assets” category is now obsolete because it is too restrictive. From stablecoins, equivalents of traditional currencies in the crypto sphere, to securities, traditional tokenized or native digital financial assets, through NFTs, cryptos can be currencies, assets or even rights with no monetary value.

This diversity bears the seeds of a value revolution. It allows the digitization of entire parts of the economy (capital, real estate, savings, etc.) and allows perfect liquidity between these different assets. It leads to the emergence of fully decentralized and autonomous entities (DAO), which therefore cannot be regulated like traditional centralized entities (such as a company, an association, etc.).

The reliability and inviolability of public blockchains have enabled the emergence of tokenized assemblies, allowing a large number of strangers to make decisions together according to pre-established and unbeatable rules. These new decentralized autonomous organizations undermine the systems of pyramidal organization in favor of horizontal consultation. They also open up new possibilities thanks to their great programmability.

Stablecoins and MNBC – A Currency War

The monetary qualification of cryptos has long been the subject of debate. Now the issue has been decided by El Salvador and the rise of stablecoins and then central bank (MNBC) digital currencies.

These new instruments embody a new battlefield between monetary powers. On the one hand, the United States of America favors the development of dollar-denominated stablecoins (example: Circle’s USDC) that contribute to the expansion of its currency and excludes any possibility of alternative tokens based on other currencies (example: Libra) . On the other hand, China, completely cut off from this ecosystem since 2021, is installing its own MNBC to further control its population. This digital currency will also make it possible in the long run to build an international exchange system that is an alternative to the western system dominated by the dollar. Tied to Russia, China hopes to challenge the economic and monetary order inherited from World War II.

Conversely, the European Union hesitates, feels, tries without much conviction. Convinced that cryptos are just an attempt to compete with “public” currencies with “private” currencies, the ECB is not undertaking any major reflection on the subject. However, in a context of war in Europe and the quest for a powerful Europe, it seems necessary to build a digital euro capable of modernizing our economy, our taxes and our monetary policy.

This new central bank currency is not anecdotal. It implies a direct link between the central bank, citizens and businesses. It therefore questions the banking and financial intermediaries, producers of money, which are essential to our economy. It involves a rethink of our banking and money issuance paradigm. This issue will have to be decided politically.

DeFi — a new evolution of finance

Cryptos, new vehicles of value, have enabled the emergence of new digital players: autonomous banks, automated exchanges, etc. But also new practices: decentralized lending, massive data storage, etc. Decentralized financing (DeFi) offers new possibilities, including financing, that are cheaper, faster and available to everyone, anywhere, anytime.

Beyond the monetary issue, these decentralized applications compete with the traditional financial sector which, rather than seeing them as an opportunity, seeks to denounce and hinder the development of these new projects; struggle of rent against innovation.

Despite the various shocks associated with the development of this ecosystem, significantly with the emergence of new disruptive technology, crypto assets around the world continue to grow and diversify, especially in weaker economies. Leaders and regulators need to realize the revolution they are creating.

This report has a threefold purpose. It aims to take stock of the changes in the ecosystem since the previous report; objects and uses have evolved radically over the past three years. It then aims to describe and democratize the diversity of this ecosystem so that anyone, not a specialist in the subject, can better understand the issues. Finally, it formulates a series of proposals that would allow France and Europe to seize the opportunities presented by this new technology so as not to repeat the mistakes made during the development of the Internet.

Download the full 204 page (8Mo) report below

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