tsyvinksi9_Camilo FreedmanSOPA ImagesLightRocket via Getty Images_crypto app Camilo FreedmanSOPA ImagesLightRocket via Getty Images

Cryptocurrencies' Next Stage

This “mainstreaming” of blockchain applications marks the end of the first stage of the technology’s development. Now, with the help of regulators in a range of countries, cryptocurrency is entering the next phase of its evolution: becoming an investable asset.

NEW HAVEN – Regulators around the world are cracking down on cryptocurrencies. China has banned them. The United States is considering a range of measures aimed at reining them in. The Bank of England is developing capital requirements for financial institutions that hold them. But, far from spelling disaster for the crypto industry, regulation is vital to its long-term prospects.

The crypto market’s development began with what can best be described as the “product innovation” stage. Blockchain technology enabled people to approach old questions (What is money? How can art be created and valued?) in new ways. This resulted in highly visible applications, such as virtual currencies and tokenized artworks. But it also enabled less glamorous innovations in a wide range of areas, from tracking container shipments to improving the integrity of health-care records.

Will blockchain’s impact be revolutionary? It depends what you consider a “revolution.” Northwestern University’s Robert Gordon, for example, questions whether the impact of more recent technological innovations will be as far-reaching as that of previous breakthroughs. Will smart phones prove to be as important as electricity? Will e-commerce be as transformative as steam power? Can the internet’s impact compare to that of radio and the telegraph?

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