The Present and Future of Blockchain and Crypto-Currency

The Present and Future of Blockchain and Crypto-Currency

“Fasten your seat belt. It is going to be a bumpy night” Bette Davis in “All About Eve”

I am sure one wandering trader said to another in history: can you ever imagine exchanging our goods for anything but frankincense and myrrh? We live in the circumstances that we know. Right now, those circumstances are rapidly changing. And, when anything rapidly changes, there is going to be a bumpy ride.

Indeed, the last 90 days have been bumpy for many things crypto, blockchain, stablecoin and NFT (see the definitions below). Many of the major crypto currencies have lost significant value. In fact, billions of dollars have been lost on paper. Of course, billions of those dollars had been gained only on paper. Put it in context, and it is really just par for the course for the nascent world of digital currency.

Source: as of 06/09/2021 at 12:30pm CDT

Is Cryptocurrency Currency?

To really understand where we are with cryptocurrency today, is to really understand the function that cryptocurrency serves in the markets. First and foremost, cryptocurrencies do not function as currency in the United States. In the United States, cryptocurrencies are simply speculative vehicles that are based on theoretical values. Why do I differentiate the United States from other countries? Well, because in some parts of the world cryptocurrencies are effectively serving as currency (Vietnam, Venezuela, El Salvador). Even more important than a cryptocurrency being stably pegged against a group of more stable currencies, is being able to utilize and monetize that currency in everyday society. I seem to personally offend Bitcoin Bros when I ask them if they can go buy a chicken in the corner store with their coin.

Even with the loss of billions on paper in cryptocurrencies, the epic failure that occurred from a stablecoin that broke the proverbial buck, and the collapse of Luna and various other crypto currencies and exchanges, I am a believer in digital currencies. In fact, I openly predict the demise of physical currency and the adoption and utilization of multiple digital currencies and blockchains in the U.S. economy in the next 10 years (maybe even less). 

Digital currency and blockchain is simply the technological evolution of a more efficient and secure system of exchanging goods and services. 

However, there is one important catch! In the United States, all digital currencies have to be regulated (A bill was introduced in the U.S. Senate by Senators Lummis and Gillibrand on June 7, 2022). If they are not regulated, they are doomed to failure-at least until we decide to change all of our banking laws to enable human traffickers, drug cartels, Russian Oligarchs, arms dealers, etc. to utilize our stable financial system. (Raise your hand if you are in favor of that. Ok, you are in favor. Now go find 218 members of Congress and 60 U.S. Senators to also agree. It is kind of chilling when I put it that way, isn’t it, bro?)

Despite the obscurity in the name cryptocurrency, much of the coming regulation will be focused around transparency in digital currencies. And banking regulators will be focused on their member institutions risk management and compliance control practices as those institutions intersect with cryptocurrencies, stablecoins, NFTs or, overall Blockchain technologies.  The regulation will come from law enforcement, the U.S. Treasury, and the banking regulators. Law enforcement will be particularly focused on tracking down financial crimes and preventing the use of the system by criminals. The Treasury will be focused on preventing financial crimes and systemic risk to the U.S. economy. And, banking regulators will be concerned with member financial institutions maintain proper risk and compliance controls in their inevitable intersection with cryptocurrencies. And, regulated financial institutions (including the Federal Reserve) and their regulators need to be concerned with how to stay relevant in the inevitable and approaching world that is dominated by blockchain and digital currency. 


Blockchain: Is a digitally, distributed ledger than is immutable by any single party to the ledger. Al cryptocurrencies are based on blockchains. Information comes into the ledger in blocks and is digitally chained to the other blocks. No single user, but instead all collective users, maintain control of the chain. Thus, the description as Trustless)

Cryptocurrency: is an encrypted chain of data that is monitored and organized by a blockchain as described above. A common misnomer is that a cryptocurrency needs to disguise the transactions and parties along the particular chain. However, cryptocurrencies have been used as currencies by people conducting illegal activities.

Stablecoin: is a fixed price cryptocurrency whose market value is attached to a stable asset. Much like a money market fund, a stablecoin should not break the buck; meaning fall below the inherent value of the stable asset it is tied to. (Terra Coins recently collapsed when it was tethered to another cryptocoin, Luna, and Luna went bankrupt. This creates the question about the real definition of a stablecoin.)

NFT: a non-fungible token, is a financial security consisting of digital data stored in a blockchain. NFT’s have been used for a wide variety of purposes including purchasing portions of fine art, music, copyrighted material etc.. The stability of the value of an NFT is open to a wide degree of speculation. The long-term value and market for NFT’s is open to debate.

Click to learn more about the proven HDCompliance higher-risk compliance banking solution. 

Andy Montgomery

Founder & CEO | HDCS 

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