If Bitcoin proved anything, it's that this technology can be monitored by a motivated government if there's clear evidence of an infraction.
Security is the biggest benefit of blockchain for crypto and it's constantly improving, but how will slow government adoption overall affect cryptocurrency?
"When it comes to cryptocurrencies specifically, I think it [slow government adoption] is a hindrance. It has not stopped cryptocurrency's growth so far, but I think it will if things don't change. It will get to a glass ceiling that will slow down the growth if standards involving taxation and clear regulations of institutions involved with cryptocurrencies are not met," said Tal Elyashiv, founder and managing partner of SPiCE VC, during a roundtable sponsored by VanEck on the evolution of blockchain.
"It's really important that these get regulated to allow the market to grow much more fluidly," he added.
Security hasn't typically been an issue of blockchain and we've seen other attributes of blockchain that add significant value. Immutability of the network, which means transactions will never go away and can't be changed, offers great value for many industries. It makes sharing data and trusting in the data much easier, and many transactional industries are spending a tremendous amount of effort around the ledgers of different companies involved in transactions syncing and matching, and make sure the management layers for approval have the ability to audit.
This is where, from a technology standpoint, payment transactions can take a minuscule fraction of a second using blockchain technology but take two to three days in the real world.
"The impetuous for this is not diminished by lack of regulations as blockchain has been adopted like crazy under the hood in most financial industries. There's almost no large bank or financial institution that is not involved in blockchain projects in different verticals, investing in the technology, or developing the capability internally. It's not slowing down -- it's exploding," said Elyashiv.
"In terms of some of the regulatory successes, I think if the colonial pipeline hack and subsequent recovery of Bitcoin proved anything is that the private sector has built up a number of analytical tools that will help identify dirty Bitcoin," said Matthew Sigel, head of digital assets research for VanEck.
There has been a lot of data that shows the percentage of illicit transactions on the blockchain is lower than what happens in a cash-based society, and the experts on the roundtable panel sponsored by VanEck are hopeful that the government will use this as a tool to find bad actors and not as an enabler of a disproportionate amount of bad actors.
Watch the full webinar sponsored by VanEck to hear more insight about the evolution of blockchain and how the foundation of crypto Is changing fintech: