Senior Client Partner, Global Head of FinTech, Payments, Crypto Practice
Baffled Over Bitcoin
It sure hasn’t looked like a good bet recently. Hailed as an industry-shattering force, Bitcoin’s value has plunged 80% in a year, and now the Chicago Board Options Exchange, the world’s largest options market, has announced it will stop trading Bitcoin futures in June.
But experts point to a lot of trends that have taken time to take hold, especially in the fast-developing world that is tech. For example, e-commerce and high-definition television each had multiple years of fits and starts before they became staples of modern life. The warning for now: leaders—in finance and beyond—risk falling behind if they don’t develop at least some cryptocurrency-related business strategies in case the digital currencies do go mainstream.
Deepali Vyas, senior client partner and global co-head of Korn Ferry’s Fintech practice, says certainly momentum “has been lost” around cryptocurrency, but adds that as firms pause to review next steps, long-term strategies both for Bitcoin and the broader world of blockchain are still important.
To be sure, innovation and demand around cryptocurrencies remain strong. JPMorgan Chase, whose CEO Jamie Dimon is an ardent skeptic of Bitcoin but not high-tech currency in general, will reportedly start issuing “JPM Coins” to investors and institutions. For its part, RBC Capital Markets predicted that Bitcoin and other cryptocurrencies could mature into a $10 trillion ecosystem. “While the cryptocurrency space has many risks, the opportunity appears vast with constant technology updates,” according to the RBC report.
One area Vyas expects to see more activity is around using hard assets, such as real estate, to back cryptocurrencies to provide more comfort to investors. One of the current complaints about cryptocurrencies in general is a lack of security (they are often a prime target for hackers) and its constant value fluctuations. Indeed, Bitcoin’s history is a roller-coaster ride of dramatic price run-ups and epic declines.
Vyas says that no one should rule out Bitcoin as a long-term investment option, either, despite its volatile past. Its maturity as a mainstream financial instrument will depend in large part on advances and adoption of blockchain technology. “In the long-term, cryptocurrencies will mature into a more sophisticated market,” Vyas says. Before that can happen, however, she says people need to feel as comfortable investing in things like Bitcoin as they do a regular checking account.
But the interest in Bitcoin can go well beyond just leaders in finance. Many organizations are focusing efforts on developing around the blockchain, the underlying technology that records Bitcoin and most other cryptocurrency transactions, Vyas says. “In the short term, the focus will be on developing tools or enterprise-level platforms to further secure crypto-transactions,” she says. Multiple organizations have experimented, to varying success, with using blockchain networks, including strengthening supply chains and creating a more efficient way to compile data.