The blockchain is not being treated as a gamble anymore, but as a separate institution that big players are ready to engage with and are waiting for a pathway for them to open.

There are so many articles that you can find, and definitely more than you have time to read, about the need and potential of mass blockchain adoption. The idea is fascinating, more than that, it is quite inspiring to think that I can go to Starbucks and get my usual flat white with a debit card full of Ethereum or Bitcoins.

I can even pay my electricity bill with the same card. So, why do we only read about mass adoption and not actually experience it? The reason is simple: we cannot enjoy the full potential of a cryptocurrency if the big institutions that we engage with on daily basis are missing from the scheme. In other words, we can come to the beach but can’t swim, if all we have is a paddle.

What do the institutions want?

There is a misconception that big institutions are not interested in the blockchain, the truth is that they simply cannot find a satisfactory entry point. Institutions look for the infrastructure, which corresponds with their values and expectations.

First of all, institutional investors engage only with players that are regulated. Legal regulation always means a higher degree of accountability and repercussions for wrong doings. Secondly, there is a deficit of individual custody accounts, in which clients can find records of the money transactions and trading activity of an individual customer. And thirdly, the institutions will engage only with entities who undergo audits at least once per year and uphold transparency.

What is the hitch?

Many blockchain enthusiasts are afraid of regulation and feel that the only way to disrupt the system is by being in denial. But, what is the point of putting a blind fold when the sun shines: it will protect you from the sun, but it will also prevent you from seeing. Such manner of conduct will be harmful in the long run, if there is going to be a run at all. The point of the blockchain is innovation, not fear of advancement and obstruction of long-term utility. The point is to create a new institutional order, together with the traditional players, that will make the previous one obsolete.

Can’t kill them and trade with them too

It is quite interesting to see how blockchain startups that understand the need for convergence and accommodation with traditional institutions operate. For example, the Hedera hashgraph platform provides a model of governance that includes oversight by 39 renewed enterprises and organization. Ternion offers segregated personal client accounts, operates with a license and will undergo yearly audits.

There are also those who have decided to invest in traditional structures, an example of such strategy is a partnership between LTC Foundation and Token Pay, which have united to buy a stake in a German WEG Bank.

As we can see, there are players who understand the importance of bringing the institutions, and subsequently their clients and their money, to the table. However, the biggest obstacle on their way are some blockchain startups, which conclude too early that the blockchain alone is enough.

Picture from Pexels.

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Having a passion for reading, Ester hasn’t noticed how she started writing. Currently finishing her bachelor’s degree in Politics and Governance at Ryerson University in Toronto, she spends her time going to yoga and writing about the FinTech innovations. She dreams about becoming a Human Rights lawyer and working at the UN. In her free time she likes to travel and gather quotes from books.

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