(Kitco News) – Bitcoin (BTC) and the broader crypto market have surprised many analysts over the past year as the launch of multiple spot BTC exchange-traded funds helped propel the top crypto to a new record high before its halving, a never-before-achieved feat.
While many have suggested this signals the arrival of institutional investors to the crypto scene, the subsequent pullback for King Crypto shows that it is largely behaving in line with past bull market performances, and mass adoption remains a work in progress.
To gain a better understanding of what is holding back the widespread adoption of Bitcoin and blockchain technology, Kitco Crypto spoke with Paolo Ardoino, Chief Executive Officer of Tether, co-founder of Keet.io, and Chief Strategy Officer of Holepunch, to get his insights on the market and the future of crypto adoption.
“Blockchain technology faces hurdles such as scalability, regulatory caution, and complexity for users,” Ardoino said when asked about the slow pace of adoption. “Despite concerns about security and interoperability, the transformative potential of blockchain for nearly every industry is undeniable.”
“For example, stablecoins pegged to real-world assets provide a glimpse into blockchain’s potential and are already impacting cross-border payments, remittance, and DeFi,” he said. “Their success underscores the tangible value of blockchain’s transparency, speed, and security, paving the way for broader adoption across diverse industries. Stablecoins are quite literally the best example of widespread adoption of blockchain technology being used every day.”
“However, overcoming these challenges requires regulatory clarity, improved user experience, and ongoing innovation to harness the full potential of this life-changing technology,” he added. “As infrastructure and accessibility improve, and trust in blockchain grows, the world will inevitably catch up to embrace its myriad benefits.”
When Satoshi Nakamoto released the Bitcoin Whitepaper, he outlined the creation of a platform for peer-to-peer decentralized transactions. But since its launch, Bitcoin has morphed into a store of value that now trades as an ETF. Asked if crypto has lost sight of Satoshi’s original goal, Ardoino said the ecosystem has significantly transformed over the past 15 years.
“Bitcoin and blockchain have the ability to build a more inclusive and resilient world. But I also believe that the best thing we in the crypto industry can do is offer real-world utility and value to people that impact their daily lives,” he said. “That is what’s going to promote digital assets adoption, not another gimmicky token.”
Decentralization without blockchain
While blockchain technology offers many benefits, it can also be complicated for the average person to use, which has been a barrier to the wider adoption of cryptocurrencies.
When asked how a network can achieve decentralization without blockchain technology, Ardoino said, “One technology we are championing right now and that helps achieve decentralization without the blockchain is Peer-to-peer (P2P) telecommunication networks.”
“P2P networks enable nodes in a network to communicate directly with each other without the need for a central server,” he said. “This allows for decentralized data sharing and communication.”
Crypto proponents are quick to tout the benefits of decentralized networks, but as with all things, there are advantages and disadvantages to greater decentralization, he noted.
“On the positive side, increased decentralization can foster a more resilient and censorship-resistant financial and internet ecosystem. It reduces reliance on central authorities, potentially mitigating single points of failure and enhancing the overall robustness of the system,” Ardoino said. “Moreover, decentralization aligns with the ethos of transparency and trust that blockchain technology embodies, providing users with greater control over their assets.”
“In terms of challenges, greater decentralization may make governance and decision-making processes more complex to handle,” he said. “Additionally, ensuring compliance with regulatory standards becomes a consideration, so it’s vital that specific regulatory frameworks are updated in tandem with adoption.”
Decentralized networks and banks
On the topic of how a highly adopted, decentralized, global P2P transaction network would impact the banking industry, Ardoino said, “The large-scale adoption of decentralized, P2P networks would bring about a transformative landscape for traditional banking institutions.”
“These networks have the potential to reshape the dynamics of transactions by enabling direct peer-to-peer interactions, reducing dependence on intermediaries,” he said. “This evolution may prompt a reevaluation of banks’ revenue models, often reliant on fees for transaction processing and other financial services.”
“In response, banks can find opportunities to adapt by incorporating new technologies or collaborating with decentralized platforms to stay relevant in the evolving financial landscape,” he said. “Additionally, the growing prevalence of decentralized networks underscores the heightened importance of transparency and security in banking operations, as these networks inherently provide enhanced levels of privacy and security. This shift encourages banks to proactively enhance their systems to meet evolving customer expectations.”
He suggested that banks would need to evolve with the times if they want to stay relevant and survive the transition to a blockchain-based financial system.
Peer-to-peer communication as a bridge to blockchain adoption
Outside of his work with Tether, Ardoino is also working on several projects, including Keet.io, to help promote the adoption of blockchain technology.
“Keet.io is a peer-to-peer web conferencing tool that aims to redefine digital communications,” he said. “Unlike traditional platforms such as Zoom, we operate as an open protocol, emphasizing decentralization, censorship resistance, and user empowerment. This approach places people before profits by returning control to users.”
The project is incubated by Holepunch, a platform for creating apps that also enables the creation of distributed networks, he noted.
“These networks eliminate single points of failure while giving individuals ownership over their data and communications,” he said. “This represents a significant paradigm shift as concerns grow around data harvesting and censorship on centralized services.”
The thing that sets Keet.io apart from other conferencing tools like Jitsi and Teams “lies in our commitment to user privacy, data ownership, and resistance to censorship,” he said. “Thanks to Holepunch technology, Keet can scale to billions of users without the need of any centralized infrastructure.”
And tapping into the ‘earn’ trend in crypto – such as play-to-earn and move-to-earn – Ardoino said Keet is looking to introduce “new models for content monetization, further empowering our users.” He noted that in February, the project launched a free open-source platform that allows anyone to build P2P versions of popular apps like YouTube or Uber for public use.
Stablecoins and the future of RWA tokenization
Real-world asset (RWA) tokenization has emerged as one of the top sectors in this bull market cycle as evidenced by the launch of the BlackRock USD Institutional Digital Liquidity Fund (BUIDL) on the Ethereum (ETH) network – the firm’s first tokenized fund.
But RWA tokenization has been a prominent fixture in the crypto ecosystem for years in the form of stablecoins like Tether, which are on-chain tokens that track the value of the U.S. dollar.
When asked how the RWA tokenization landscape will change moving forward, and what that means for stablecoins, Ardoino said, “There will always be a place for the dollar on the blockchain.”
“The dollar’s stability and widespread acceptance make it a natural fit for blockchain-based transactions, ensuring seamless integration with existing financial systems and facilitating global trade and commerce,” he said. “Additionally, its status as a reserve currency and the backing of trusted institutions provide confidence and familiarity in an increasingly digitized financial landscape, reinforcing the dollar’s enduring role on the blockchain.”
“Tokenizing real-world assets, such as real estate, stocks, commodities, and even intellectual property rights, can unlock liquidity, reduce friction in trading, and enable fractional ownership, opening up new investment opportunities and democratizing access to assets traditionally reserved for institutional investors,” Ardoino said. “Additionally, tokenizing RWAs can enhance transparency, streamline processes like settlement and ownership transfer, and reduce counterparty risk.”
He suggested that as the infrastructure and regulatory frameworks for tokenizing RWAs continue to mature, “it’s likely that these emerging applications will play an increasingly significant role in shaping the future of tokenization, complementing stablecoins and expanding the utility and versatility of blockchain-based assets.”
As for whether tokenized RWA’s like real estate or stocks will be hosted on public or private blockchains, Ardoino said they could potentially be hosted on “both public and private blockchains, depending on factors such as regulatory requirements, the level of transparency desired, and the intended audience.”
“Public blockchains offer transparency, immutability, and decentralization, making them suitable for tokenizing assets accessible to a wide range of participants,” he noted. “Private blockchains, on the other hand, offer greater control over access, privacy, and scalability, making them preferable for enterprises or regulated industries where strict compliance and confidentiality are paramount.”
And in the future, he said investors will be able to store, trade, and transfer their tokenized RWAs on platforms like Keet thanks to the integration of a digital wallet that supports multiple blockchains and facilitates transfers and payments.
Similar to what Elon Musk wants to do with Twitter, projects like Keet are striving to become ‘everything apps’ that handle money, social media, and other facets of daily life, Ardoino noted.
“The integration of a built-in payment method supporting Bitcoin Lightning and USDt micropayments within Keet represents a significant step towards multifunctionality of P2P apps,” he said. “The inclusion of payment functionalities not only enhances user convenience but also positions the platform as a versatile tool capable of handling diverse aspects of users’ daily interactions.”
Debt, money-printing, and the future of fiat
Tether (USDT) is the top stablecoin by market cap with a circulating supply of more than $104.6 billion tokens, but its standing in the crypto market could take a hit if there is any change in the status of the U.S. dollar as the world’s reserve currency.
When asked if Thether sees any risk in having USDT backed by the U.S. dollar now that the national debt has surpassed $34 trillion and the debt-to-GDP ratio is at 122%, Ardoino said they are “closely monitoring the situation surrounding the U.S. debt ceiling and its potential impact on our reserves, particularly treasury bills.”
“Our commitment to prudent risk management is evident through multiple strategies such as investing in short-term treasuries and engaging in overnight reverse repos to effectively manage exposure,” he said. “We also maintain $5.2 billion in excess reserves over the minimum 100% requirement, providing an additional layer of security.”
“We believe our strong focus on risk management and maintaining a robust reserve composition underscores our awareness of broader financial dynamics and the proactive steps we continue to take to mitigate potential risks to USDT,” he added.
Ardoino suggested that reports of the dollar’s demise are overblown, especially when considering the fact that there is no viable alternative.
“While it’s crucial to keep an eye on economic trends, it’s equally important to acknowledge the enduring strength and stability of the US dollar,” he said. “Maintaining its status as a global reserve currency for decades, the US dollar’s solidity rests upon the robustness of the US economy and the credibility of its institutions. Fluctuations in its value are typically within the realm of normal market dynamics, with significant and prolonged depreciation being improbable.”
“Therefore, stablecoins such as USDT, which are tethered to the dollar, stand poised to uphold stability and trust even amidst market fluctuations,” he said. “Tether’s commitment to always pegging to the dollar ensures that maintaining its 1:1 reserves is paramount for honoring customers’ expectations of receiving their dollars back.”
Ardoino said that as a leading stablecoin issuer, “Tether consistently monitors market trends and regulatory changes to uphold the reliability and resilience of its offerings. Furthermore, Tether’s dedication to transparency and accountability serves as a cornerstone, providing users and investors with confidence in the stability of USDT and the broader cryptocurrency ecosystem.”
History shows that over a long enough time scale, all fiat currencies eventually lose their luster and fall out of favor. Ardoino said that when the day arrives when the world moves away from the dollar as the primary reserve currency, “the emergence of Tether Gold (XAUT) and other gold-backed stablecoins could potentially disrupt the traditional notion of a single reserve currency.”
“Tether Gold, in particular, presents a compelling alternative due to its direct peg to physical gold, offering stability and international recognition, which are historically associated with the precious metal,” he said.
“The appeal of Tether Gold lies in its non-sovereign nature, which could resonate in a global landscape characterized by shifting power dynamics and geopolitical uncertainties,” he added. “Its transparency and efficiency, facilitated by blockchain technology, are additional strengths that could position it as a viable contender for a reserve currency alternative.”
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.