I2c President: Blockchain Will Unlock Crypto

In an interview with Karen Webster, i2c president Jim McCarthy said we are still a way out of traditional adoption, but change is coming.

It is a rule of thumb when it comes to secular change that very few innovations are introduced to quickly change the status of the payments themselves.

“Most things take 10 to 15 years to drive through the ecosystem,” McCarthy told Webster, especially when a range of stakeholders are involved, spanning markets, consumers, merchants, and two-sided governments.

To get an idea of ​​how difficult it is for cryptocurrencies to earn, well, currency in everyday life, consider bitcoin, possibly the grandfather of cryptocurrencies – and still the 900-pound gorilla in space, with about two-thirds of the market cap. throughout the industry.

Webster noted that bitcoin has been around for a decade and although the common view was that the digital offering would be used far and wide as a channel for payment transactions, those predictions were wildly misplaced.

Part of the reason bitcoin has failed to live up to expectations, McCarthy said, is that the enthusiasm surrounding buying and holding (and speculating) with bitcoin as an asset class has focused on building of hedges against other equity investments (as gold has traditionally been used).

It was (and in some cases still is) this speculative wild west of digital currencies that prevented cryptocurrencies from being more closely tied to trade, McCarthy said. The mechanics and clumsiness of it all didn’t help. The individual who wished to spend fractions of bitcoin on a cup of coffee was subject to slow transaction times and wild price swings that increased (or decreased) the value of the coin itself, and therefore the value of that fraction.

The difference a decade makes

But in the decade following bitcoin’s debut, technologies have evolved in the payments ecosystem that are helping to pave the way for cryptocurrencies to become more widely adopted.

There is tremendous efficiency from a pure network point of view, he explained, so the Internet – and the efficiency of the Internet – have changed. Advances in peer-to-peer connectivity and the emergence of tokens as a payment vehicle are opening new avenues for cryptocurrencies.

The emergence of “network networking” strategies by Visa and Mastercard has opened the door to faster payments, electronic payments and blockchain to back it all up.

As McCarthy put it (with a nod to efforts like Visa and Wirex’s collaboration to bring crypto to everyday spending), “over 50 million merchants and acceptance markets, it’s hard to replicate in terms of a two-sided network.” .

In this context, he said, using Visa and Mastercard as entry points and leveraging the range of wallets on offer to store digital currencies can be a powerful payment change agent. In May, i2c Inc. announced a partnership with Crypto.com’s end-to-end crypto ecosystem, which consists of a Visa crypto debit card and wallet app to buy and sell cryptocurrencies and earn cash rewards in cryptographic form. In this case, McCarthy argued, digital assets are made spendable.

“We are the infrastructure that takes what is actually a virtual wallet – in a mobile or online sense – and connects it to the real world, whether in e-commerce or face-to-face with a card,” he said.

Demographics and digital Fiat

According to McCarthy, i2c partners are seeing that, in his words, “the sky is the limit” when it comes to turning digital assets into everyday currency.

Mainstream adoption will be made easier in part by demographics, as younger generations are more comfortable using mobile devices to transact and where developing economies in Latin America and Asia lack the infrastructure legacy banking in place seen elsewhere, which translates into greenfield opportunities for cryptocurrency players.

As cryptocurrencies have garnered more attention in financial services, of course, governments and central banks have thrown their hats in the ring – and thus digital fiat is being seriously considered. China, of course, has been a leader here in its efforts to test and distribute a digital yuan. McCarthy also said that Sweden has also made progress with its digital crown.

“It lays the foundation, certainly for study, research and development, if not full-fledged movement,” he said of the efforts of the central bank and cadres developed by the BIS.

Meanwhile, as central banks look to a roughly 2025 time frame to get operational with digital fiat, McCarthy said in the short term we will see more practical use cases leveraging cryptocurrencies, especially in the business-to-space space. business. He pointed to JPM Coin as a key advance in how cryptocurrencies could be used to reduce the friction inherent in the financial services ecosystem.

In this case, he told Webster, the coin is separated from its pure monetary asset function and used as a token that can be passed in real time between known entities as a way to solve inefficiencies related to the cross-border correspondent. banking.

It is a space, he said, ripe for rupture.

“There is still a lot of inefficiency in business-to-business commercial payments that could very well be solved in combination with having legal accounts and cryptographic tokens that you are able to transfer between trusted parties,” he said.

In the long run, in the drive to make cryptocurrencies spendable, beyond the rails themselves, McCarthy said compliance and security standards need to be robust. Crypto has been championed by critics as a conduit for fraud and money laundering.

But, as he noted, getting in the crypto ecosystem in the first place is not an easy task, and in fact the security measures in place – know your customer (KYC), documentation that spans passports and licenses – are more stringent than they are when using money, the most ubiquitous store of value.

“We apply the same kind of values ​​to everything we’ve done with any multi-currency platform,” he told Webster of i2c’s security processes. “We use this information before you come aboard to get a card. This is based on years of best practices in the payment industry.”

Blockchain remains a key driver of the future of cryptocurrencies, both as a unit of currency and as a store of value. Immutable and decentralized ledgers mean that getting everything from payments to digital driver’s licenses to medical records securely and portable holds great promise.

“It just takes time,” he told Webster, of the broader embrace of cryptocurrencies and blockchain binaries looming on the horizon. “I think we’ll look back and again, in 10, 15 years – and say, ‘Oh, that’s it. been fast. “”