Hi Stefan, welcome to Fintech Interview Series. DeFi market is exploding. Yet, crypto seems to be falling wayward. What do you think will happen for crypto players in 2023?
In 2023, crypto will recover faster than fiat!
Thanks to record levels of inflation, fiat currency is now depreciating in value at rates we have not seen in decades. While this has been the case in developing countries like Venezuela and Nigeria for some time, now that it is affecting the US, it is finally becoming a problem of note. As this happens, even bitcoin’s famous volatility is not hindering it from being seen as a store of value. Indeed, it is likely that throughout 2023 will see a recovery in crypto as Fiat currencies across the world continue to decline in value.
How would DeFi impact the Fintech industry?
2023 would spell a new dawn for “pure” DeFi…
Next year will also see the rise of decentralized finance in a much more “pure“ way than we saw during the first boom of 2020. That first boom attracted a huge influx of money which created opportunities for dishonest centralized providers to take a lot of that money very fast, which of course has now all been largely lost. The infrastructure behind DeFi, however, remains strong and viable.
DeFi continues to do its job of providing an alternative financial system in which people are able to save, invest and earn rewards in ways that are not available in traditional finance. We’ve now come to realize the value of this system remaining decentralized, and 2023 will see continued building throughout.
What are your thoughts on inflation and global recession hitting crypto markets at the same time?
Inflation is here to stay.
As signaled by the Fed last week, it seems inflation is here to stay. This is not least due to the outdated ways in which price rises are being measured and monetary policy decisions based on this. In the UK and the US, measurements lag reality by over a month in most cases, which means that decisions made by the Fed and other central banks to tighten or ease typically don’t happen in time to prevent or lessen economic shocks. The impact of this is going to hit in 2023.
Pleaser shed some light on the crypto indices and data analytics.
The rise of crypto indexes and data will be key to making informed decisions in 2023 and beyond.
Indeed, as we march ever faster toward a decentralized, Web3 world, it’s important that we start to move towards, independent, unbiased, economic data aggregation. Using independent, transparent, and publicly verifiable data, governments, agencies, and companies worldwide can make better-informed decisions, the outcome of which impact everyone’s daily lives. Blockchain presents the best opportunity we have ever had to achieve this, and Truflation is the first step toward this future.
How would global geo-political events influence crypto ands DeFi adoption?
Political tensions will continue…
Global tensions are unlikely to ease, with the situation in Eastern Europe remaining precarious, while tensions between the US and China show no signs of letting up. This will continue to impact the main markets and supply chains.
What about the role of regulators in this industry?
Regulators will stall to allow big institutions to enter crypto.
The US Securities and Exchange Commission continues to make noise about the regulation of crypto, most recently stating that it will be regulated as a security. However, we are yet to see anything firm and binding. This is likely because the regulator is stalling to allow time for big traditional finance institutions to enter the market, with the SEC perhaps hoping that JP Morgan will do its job for it.
It is likely that the IMF and the EU are also stalling for the same reasons. Indeed, with CBDCs set to begin entering the market next year, you will see a number of traditional finance behemoths enter the field of cryptocurrencies next year. As such, it may be we start to see quite a clear split between centralized and decentralized finance over the next year.
When is the next bull run for crypto investors?
Smart investors will build for the next bull-run very soon.
Crypto has already gone through a 360-day winter. Barring any additional malicious attacks by fraudulent, corrupt individuals in this industry, we should be on track to have a solid recovery in 2023. The industry will build out some new foundations, great new services, and amazing user experiences that will further highlight the benefits of decentralized finance and the metaverse, while we will see new applications for NFTs, and maybe even security tokens.
While the going is tough right now, in these times the tough get going. This is a market where opportunity is rife, and where smart investors will start placing bets as they prepare for the development of a stronger crypto economy. Indeed, this is economics 101 as taught in any university: the time to invest in infrastructure and to build is the time when everything and everyone else is retracting.
Seasoned investors stop investing in a bull market because that’s when everybody else FOMO’s in. Instead, as economies hit high growth periods they reap the benefits of their bear market activity and capitalize on the infrastructure they have put in place during the tough times.
Thank you, Stefan! That was fun and we hope to see you back on globalfintechseries.com soon.
[To share your insights with us, please write to firstname.lastname@example.org]