To achieve stability and legitimacy, the crypto and digital currency markets are dependent on:
Enhanced Security Measures – which are now a clear precursor to regulation for the legitimacy of this marketplace. The scale and severity of cryptocurrency heists [over the course of 2021] made the need for enhanced security abundantly clear. Many of the crypto and digital currency initiatives will encounter consequential cybersecurity issues in 2022 that will impact public adoption and invite increased regulatory pressure. There is a middleware ecosystem emerging in the form of marketplaces and exchanges that are based on Web2 technologies that are being deployed without proper consideration for cybersecurity best practices.
Regulation or Overregulation?: It has been the conventional wisdom that “traditional” regulation would be the inevitable fate of cryptocurrency. The U.S. Government does not have a great track record of understanding its role (if any?) in disruptive innovation and technology. The Catch-22 here is that any efforts to thwart innovation in this space could create durable national security risks in the future if the U.S. loses innovation advantage by driving key projects to external domiciles or ceding control of critical infrastructure to foreign governments.
Global Crypto and Digital Currency Adoption Rates: The economic benefits of the U.S. dollar serving as a global reserve currency could be diminished with the widespread adoption of Bitcoin as a store and exchange of value. Several nation-states have or are looking to recognize Bitcoin as a currency or as legal tender and several U.S. state initiatives are also underway. The secondary challenge here for the U.S. government is ensuring that any inevitable movement to a new reserve currency model is tied directly to the U.S. innovation ecosystem.
We continue with our brief survey of crypto and digital currency initiatives from around the globe, all of which are officially sanctioned to enhance national competitive advantage (in the event crypto overtakes the US dollar as the global reserve currency). It is the cumulative adoption rate of state-sanctioned crypto and digital currency legalization and regulation that will propel this innovative system for value exchange as a global currency standard. Today, we cover India, Argentina, and Russia. In a previous post, we provided an analysis of crypto and digital currency initiatives in El Salvador, Panama, and Ukraine.
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About Daniel Pereira
Daniel Pereira is research director at OODA. He is a foresight strategist, creative technologist, and an information communication technology (ICT) and digital media researcher with 20+ years of experience directing public/private partnerships and strategic innovation initiatives.
