In the development of cryptocurrency technology, great strides have been made in turning what was once thought of as just an IT experiment into what many see today as a viable currency solution for the world. However, there is still much to be done to achieve that, legitimacy with the wider audience is not easily won, but with the news that the commissioner of CTFC J Christopher Giancarlo has given a speech discussing the successful trial of blockchain my major financial institutions, could that legitimacy be much nearer that we thought?
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For the cryptocurrency industry in general, and Bitcoin in particular, throughout the last seven years of development one of the biggest challenges it has always faced has been one of legitimacy. This is an extremely important aspect of a fiscal system, legitimacy brings with it trust, and for encouraging new adopters of any digital currency, trust is key. As more and more of the finance industry have moved to research the potential operational benefits of blockchain technology, the underlying foundation for all digital currencies, the cryptocurrency industry has been able to point at this as a measure of legitimacy, and indeed trust, in the technology.
That proves it has recently taken a major step forward that’s to J Christopher Giancarlo, the commissioner of the US Commodity Futures Trading Commission (CFTC). Speaking at the Cato Institute, he noted that several major financial institutions, including Bank of America and Citigroup, had completed a successful test of blockchain in credit swap markets using a distributed ledger network. Noting that this success “proves the merit” of the technology and that further tests by other major institutes would reinforce that impression in the near future. He also noted that the distributed ledger model could also aid regulators across a world financial market that is highly fragmented in terms of oversight, and that blockchain presented opportunities for new thinking in this arena.
In terms of blockchain itself this is further proof of the robustness of the technology, and indeed nullifies many of the more vociferous unfounded objections often put forward about digital currencies. It is hard to continue to argue that a digital currency is a haven for criminal money while global regulators are praising the system as a tool for combatting that criminality within the system. The financial institutes are moving at speed with their research into blockchain, and the successful test, along with the public acknowledgment of it and the opportunities it represents is an incredible opportunity for the digital currency industry to build on.
Legitimacy with the wider audience is key to cryptocurrency growth, and as much as some within the industry dislike the association, for that wider audience being seen to be adopted by the household name financial institutions can only have a positive effect. While the traditional banking industry has had its fair share of issues over the last decade in particular, the public at large still largely view the system itself as a place of trust for their funds, and it is this that the cryptocurrency industry must capture as well.