Tal Elyashiv, Founder and Managing Partner at SPiCE VC, which claims to be the first fully compliant (regulation wise) tokenized venture capital fund, notes that today, we’re at the beginning of what might be the greatest transformational period in modern history.
Elyashiv writes in an Op-Ed published by CNBC that with the very first Industrial Revolution, new technologies such as assembly lines, factories and transportation changed our society at the fundamental level. This time around (following the COVID outbreak), instead of cogwheels doing all the manual work, blockchain or distributed ledger technology (DLT)-enabled digitalization is expected to continue to drive transactions, Elyashiv predicts.
“Specifically, this latest phase of progress (in blockchain and Fintech) has its sights set on a massive industry ripe for disruption: finance.”
He also noted that digital finance and the global monetary system is now beginning to leverage decentralized blockchain or DLT solutions to “modernize” global capital markets. He confirmed that the dominant or major players in these systems now include some of the largest financial institutions and global reserve banks.
“As tokenization is an inevitable trend, central bank digital currencies (CBDC) are surging in adoption, since they are simply one kind of a more generalized digital asset, albeit one that is bound to risk-free central bank money. The global rivalry in digital currencies is heating up as central banks from an increasingly wider swath of countries, including China, Hong Kong, Thailand, the EU, U.K., U.S., and Australia, explore potential use cases for tokenized money.”
Lee A. Schneider, General Counsel at Block.one, one of the world’s largest blockchain companies and creator of the EOSIO blockchain protocol, notes in an Op-Ed published by CI:
“As the many recent reports on central bank digital currencies (CBDCs) and stablecoins show, the capability to make interoperable and programmable money exists. There are of course many important issues to sort out, such as who controls the platform and how, what digital financial privacy looks like, whether monetary and fiscal policy will change, and whether to restructure payments and banking architecture. Nevertheless, the time for this evolution of money is now.”
Elyashiv believes that CBDC is the first place where we may actually be seeing top-down adoption of DLT from global reserve banks and governments. The adoption of these so-called CBDCs could potentially lead to considerable DLT ecosystem innovation and related development that will affect the operations of financial institutions, Elyashiv explained.
He also noted that the ongoing adoption of DLT systems could potentially extend even beyond finance to other key sectors such as security, supply chains, healthcare, retail and digital commerce (which we have seen already with platforms like VeChain).
According to Elyashiv, whatever happens with CBDCs could have “far-reaching implications” on the future of digital finance, such as cryptocurrencies and digital securities. He believes that CBDC and DLT adoption will “influence the forward-moving progress of every industry.”
Elyashiv acknowledges that China is “far ahead” when it comes to implementing “real” digital finance solutions and related currency initiatives, which may have already given them a meaningful “first-mover” advantage.
“The US and its regulatory bodies are still the gold standard and will ultimately set the pace and the rules. US-based innovators continue to roll out viable solutions, but which powerhouse will roll out the standard solutions first to control the space and our digital economic destiny?”
Most of the world’s major financial institutions and organizations are now involved in some way in the evolving CBDC and DLT sector. In November 2020, Deutsche Bank stated that the EU is far behind on digital innovation, and predicted CBDCs would replace cash. Also in November, Cypherium, an interoperability solution provider for blockchain-based digital currencies, had launched its mainnet.