Ripple, a FinTech company, produced a paper titled “Crypto Trends in Business and Beyond” earlier this month about a “blockchain-driven landscape” it refers to as the “Internet of Value.”
The report, which “focuses on the role of key blockchain use cases like payments and DeFi, and the token types — often referred to as “digital assets” — for those use cases, including cryptocurrencies, central bank digital currencies (CBDCs), non-fungible-tokens (NFTs), and more” — is divided into three sections, each of which “touches on the main activities that occur within the Internet of Value,” namely tokenization of value, management of value, and movement
Value Tokenization
“On the Internet of Value, tokens, also known as digital assets, are the avatars of value.”
“… you may mail it, exchange it, lend it, borrow it, leverage it for collateral, fractionalize it, aggregate it, track it, validate it, activate it, share it, reward it, vote with it, and more, depending on the token’s capabilities.”
“For consumers, the so-called ‘non-fungible token,’ or NFT, has brought blockchain and cryptocurrencies into the mainstream.” The Central Bank Digital Currency, or CBDC, has brought blockchain technology to the management of national fiat currencies, and it has the potential to be a gamechanger for financial efficiency and monetary policy management for governments.”
“Interest in NFTs soared this year, with a 38,000 percent rise in trading volume between 2020 and 2021, and over $10 billion worth of NFTs traded in just the third quarter of 2021.”
“NFTs are now widely hailed as the critical technology for enabling ownership in the metaverse…”
“It is believed that 80 percent of central banks throughout the world are actively investigating the usage of a Central Bank Digital Currency, or CBDC.”
Tokenized Assets Management
“The Internet of Value’s efficiency is driven by tokenized asset liquidity and functionality. The possibilities for what to do with a token are endless, from holding to exchanging, borrowing to lending, collateralizing to rewarding, fractionalizing to bundling, staking to voting, gaming to farming.”
“This year, DeFi in its various manifestations has definitely played a prominent role in several crypto groups in terms of value management in the Internet of Value.”
“According to our research, 76% of global financial institutions anticipate to employ cryptocurrency in the next three years, assuming regulatory approval.”
“We were dismayed to discover that sustainability ranked very low as a feature that Financial Institutions and Enterprises would consider when adopting a certain cryptocurrency.”
Using Blockchain Tokens to Move Value
“A crucial driver of the Internet of Value’s efficiency and agility is the capacity to move value — in other words, to make what the industry calls a payment — with low friction, tremendous speed, and high transparency.”
“Nearly 70% of financial institutions surveyed for this report said they are interested in adopting blockchain for payments, whether for intra-bank/intra-branch transfers, inter-bank payments, or client payments.”
“When financial institutions were asked what the main benefits of using blockchain and crypto for payments are, there was a fairly even spread across a number of benefits, with data security and quality coming out slightly ahead of growth opportunities in more markets or within markets, and real-time settlement.”
“We were shocked to find that the ‘no pre-funding required’ benefit scored lower than the others for both Financial Institutions and Enterprises. This astonished us because prefunding is a big pain point that pushes up expenses, reduces working capital, hinders investment and expansion, and complicates accounting, according to our daily talks with banks, payments providers, fintechs, and others.”
“It’s possible that the prefunding benefit isn’t regarded to be as vital as the many other powerful benefits provided by blockchain for payments… We believe that many Financial Institutions have simply accepted prefunding as a way of doing business and do not take the time to fully evaluate the costs of prefunding. To lessen their need on prefunded accounts, innovators in the space are looking to solutions like Ripple’s On Demand Liquidity.”
“…almost a third of those polled say they’d consider using cryptocurrency to make a domestic or international purchase, and a quarter say they’d consider sending money to a domestic or international friend or family member.”
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.
