In May of 2010, two pizzas were purchased for 10,000 bitcoin. While considered a novelty at the time, that early real-world transaction involving cryptocurrency heralded a steady march for the technology towards the mainstream.
Today, over a decade later, the evolution and maturation of crypto and blockchain-enabled assets like Non-Fungible Tokens (NFTs), Central Bank Digital Currencies (CBDCs), stablecoins and others are all poised to shape the future of business, finance and society.
Yet, common myths about crypto persist. Business leaders must be able to separate fact from fiction in order to realize the improved operations, increased agility and lower costs crypto solutions can yield.
Myth #1: Crypto Is a Fad
With all the industry noise and recent market turbulence, it’s easy to dismiss crypto as temporary. But the reality is that crypto and blockchain solutions have real utility as everyday technologies across a wide range of industries, B2B solutions and applications.
Blue chip brands like PayPal, Visa and Starbucks have kicked off crypto rewards for their customers. And a number of payments companies have deployed crypto-enabled solutions to speed up transactions, lower costs, and improve transparency and reliability—all major pain points for cross-border payments.
Central banks and governments are also exploring crypto and blockchain in the form of CBDCs to advance financial inclusion, improve the effectiveness of monetary policy and boost payment efficiency, both domestically and internationally. According to research from the Bank for International Settlements, more than 90% of the world’s central banks are actively exploring CBDCs.
Today, consumers around the world are engaging with crypto far behind its initial use as a payment mechanism. In fact, active blockchain addresses reached an all-time high of 15 million in March—doubling in two years—as developers, gamers, artists and the like leverage the extensive capabilities of this technology.
Tellingly, the number of active developers on blockchains is holding steady even as the market endures some turmoil, meaning applications and new uses for the technology will only continue to increase. It follows that more use cases, greater interoperability and improved liquidity will also help grow the number of end users that can be served by crypto.
Myth #2: Crypto Is Risky And Volatile
While cryptocurrencies are subject to market volatility, not all crypto-enabled solutions or digital assets are created equal. Stablecoins, for example, are pegged to a major currency (e.g. the US dollar) meaning they typically have little-to-no volatility beyond the volatility of the currency to which they are pegged. This also means stablecoin demand remains high even during market fluctuations.
As another example, with Ripple’s payments solution should the price of any given cryptocurrency or digital asset change during the 3-5 seconds it takes a payment to settle, Ripple automatically absorbs that change and the customer is unaffected.
Crypto can power B2B solutions that have demonstrable everyday use cases. Business leaders and treasury managers are leveraging crypto solutions to facilitate cross-border payments including remittances, domestic consumer payments and internal treasury flows. With real-time settlement and increased data visibility, crypto solutions have brought greater speed, transparency and cost savings to payments worldwide.
From faster, more affordable payments, to tokenized real world assets (RWAs) like carbon credits and real estate, the technology is already driving real-world value for businesses everywhere, and we’ve only just begun to scratch the surface. And as enterprise adoption continues to trend up and to the right, crypto’s perceived risk will likely continue to trend down.
Myth #3: Crypto Is Not Sustainable
Industries, consumers and governments are all helping to prioritize sustainability in blockchain. It’s become clear that crypto can actually contribute to greater sustainability gains in two distinct ways.
First, it’s important to recognize that not all crypto is energy intensive. The mechanism that a blockchain uses to record and execute transactions dictates its energy usage. The XRP Ledger (XRPL), for example, is green by design and is recognized as the first major carbon-neutral blockchain. And its native digital asset XRP doesn’t require mining. Some crypto operations are even using renewable energy sources to improve sustainability. This has been an important factor for organizations and countries considering using crypto solutions for applications like carbon markets or a CBDC.
Second, the technology itself can help advance the fight against climate change. The tokenization of carbon credits on the blockchain helps to remove carbon from the atmosphere and provides significant advantages for otherwise fragmented and opaque carbon markets, bringing more transparency, efficiency and access to a budding industry.
Myth #4: Crypto Solutions Are Complex And Difficult To Implement
Before the advent of the World Wide Web, the internet was a very difficult, intimidating place for the average person compared to today’s standards. It required improvements to usability and connectivity to become widely accessible and functional to the everyday user.
Similarly, the crypto industry has made substantial progress since the advent of bitcoin in 2009, and improvements continue to arrive at breakneck speed. As consumers become increasingly interested in interacting with crypto, traditional financial institutions are responding by integrating the technology into their service offerings.
Ripple is an active partner in this process by bringing enterprise-grade crypto solutions to enable anyone in the world to move value as seamlessly as information moves today.
Streamlining cross-border payments for financial institutions and global businesses
Abstracting away the complexity of integrating digital assets with traditional fiat systems
Preparing central and commercial banks for a digital-first future with CBDC Platform
Ripple is simplifying crypto solutions to facilitate greater adoption and realization of the benefits.
Education efforts like the University Blockchain Research Initiative (UBRI) are also helping make crypto understandable and actionable across generations and industries. Ultimately, new solutions, services and improvements to user experience are making it easier for everyday people and large enterprises alike to unlock the power of crypto.
Myth #5: Crypto Lacks Global Regulatory Clarity
While the U.S. is no stranger to a lack of regulatory clarity with respect to digital assets, many other countries have taken a more forward-thinking, progressive approach to support innovation and build trust amongst policymakers, providers and end-users.The rapidly expanding use of crypto solutions by governments, individuals and businesses worldwide has helped drive a parallel increase in regulation globally.
For example, the European Union’s Markets in Crypto Assets Regulation, which sets forth a crypto framework for the EU’s 27 member states, entered into force in June 2023. Additionally, the UK’s Financial Services and Markets Bill recently received Royal Assent, paving the way for stablecoins to be regulated as a form of payment under UK law.
David Mercer of LMAX Digital points out this is a good thing: “The only thing worse than people talking about you is not talking about you, and it is good that they are recognising this asset class.”
Additionally, the immutable nature of blockchain technology that solidifies each transaction should provide some confidence to regulators as it makes it easy to trace, identify and act upon unusual patterns and behaviors. That means businesses can benefit from enhanced security and transparency, reducing the risk of fraud and ensuring compliance.
The overall regulatory environment will likely come into even greater focus as clear, progressive legislation proves effective.
Is Your Business Ready for the Future of Finance?
Consumers are increasingly interested in interacting with crypto and institutions are actively exploring blockchain’s potential. As the technology continues to mature, the industry can likely expect more regulation, applications and use cases to emerge, bringing greater clarity, legitimacy and accessibility to the market.
For leaders to remain competitive in this changing landscape, it's essential that they seek the truth about crypto and blockchain. Start by downloading Ripple’s latest New Value report to learn how others view crypto and its place in the world.
