Developments like those at PayPal
Much has been made written and spoken about the recent foray by PayPal and others into the cryptocurrency space, but that is just the tip of the iceberg in terms of blockchain and cryptoasset development. Adding 300 million customers who will be able to transact with crypto, and do so on a peer-to-peer basis, is good news for the ecosystem at large. Such developments might seem antithetical to the original idea and concept of bitcoin, but are key to the continued expansion and development of cryptoassets.
Bitcoin was an ideal, and while that ideal has not exactly worked out as planned, there are several developments that continue to accelerate blockchain and crypto adoption. Intermediaries and third parties might have been the players that crypto was designed to disrupt, but in order to actually get cryptocurrencies to be used as legitimate fiat alternatives there does seem to be a need for these intermediaries to be involved. Stablecoins and CBDC’s are simply symptoms of a much broader trend toward more semi-centralized and centralized blockchain and cryptoasset options.
Let’s take a look at just why the blockchain and crypto space needs, and will benefit from, the involvement of third parties and intermediaries.
Stability. Engaging third parties will help encourage broader usage of cryptocurrencies as fiat alternatives, and not just as investment options. Price stability has long been an issue for truly decentralized cryptocurrencies, but by involving some of the major payment processors, price volatility will hopefully become less of an issue. By working with, as opposed to against, incumbent financial institutions and third parties, cryptoassets will gain greater stability and greater utilization.
Prices for specific crypto can be higher or lower than others, but having the backing and infrastructure of well known payment processors can help reduce some of the more stomach churning price volatility.
Functionality. Crypto was designed to be a legitimate alternative to current fiat currencies, but in order for that to actually come to fruition these options need to be as convenient and as simple to use as current options. Linking in third parties, payment processors, banking institutions, or some other sort of institution will help make this possible. In the aftermath of the bitcoin price bubble of 2017, multiple peer-to-peer services and platforms have emerged, so in order to achieve mainstream adoption, crypto options will need to be as customer friendly as these current tools.