Looking back at his past predictions about the future, Paul Brody, EY’s global blockchain leader and a columnist, acknowledges that his columns have often represented wishful thinking rather than accurate forecasts. However, he believes that some of his major forecasts have turned out to be directionally correct. Brody is not content with being a sideline observer; he is actively building a blockchain business and technology with the aim of influencing the future path.
Brody envisions a future built on the public Ethereum ecosystem, characterized by robust regulatory-compliant business transactions and meaningful privacy protections. In this model, a universal business infrastructure can be created, making it simple, scalable, and reliable to snap together business interactions. Financial services are easy to integrate and serve their intended purpose of funneling capital to useful projects, from start-ups to green energy initiatives.
While progress has been slower than desired, Brody notes that enterprises have embraced tokenization and Ethereum has become the global standard. The trend of permissioned chains, although not dead, is slowly fading out. Additionally, enterprises have started to embrace both fiat currencies and cryptocurrencies, and scalability challenges are being addressed. Privacy challenges are also being tackled with the use of zero knowledge tools and applications.
Brody acknowledges that much of the progress in the blockchain sector has come about during the dark times of crypto winters. Although the sector is not yet out of the winter, Brody remains hopeful that the implementation of the Markets in Crypto Assets (MiCA) in Europe from June will be an important milestone on the path towards the next blockchain summer.
Brody presents three predictions for the upcoming blockchain summer. Firstly, he hopes that this summer will prove to be more sustainable, with macroeconomic changes having less impact compared to other problems such as capacity limits, high fees, fraud, and limited institutional capital pools. He believes that Ethereum’s scalability improvements and regulatory measures will make Ethereum and crypto look and feel much closer to the rest of the financial ecosystem.
Secondly, Brody predicts that central banks around the world will converge upon regulated stablecoins and Central Bank Digital Currencies (CBDCs) as the preferred approach to implementing CBDCs. This choice will be driven by practicality rather than a sudden embrace of decentralization and individual control. Currently, most CBDC plans are connected to centralized systems with limited programmability. Central banks are realizing that the value-add of CBDCs over existing systems is limited, and finding solutions to these shortcomings is challenging. Building fully programmable and open systems comparable to Ethereum seems like a monumental technical challenge, and deploying a single national coin on a public network poses potential hacking risks.
Finally, Brody anticipates that some public sector-managed CBDCs will proceed and offer compelling value. However, he acknowledges that there are still risks of fraud and risk in financial ecosystems, and no ecosystem is entirely free from these challenges.
In conclusion, Paul Brody remains optimistic about the future of blockchain and crypto, hoping for a more sustainable blockchain summer, convergence of regulated stablecoins and CBDCs, and the successful implementation of public sector-managed CBDCs. While challenges remain, Brody believes that progress is being made and that the future of blockchain and crypto is promising.