Aaron Rafferty of StandardDAO Explores the State of the Crypto Space and More

With several ups and downs, the first quarter of the crypto spáce has been more of a roller coaster ride than anything else.

That doesn’t mean though, that the ride hasn’t been exciting.

We had a sit down with Aaron Rafferty, co-founder at StandardDAO, who explored a whole host of issues that affect the crypto space and more.

E-Crypto News:

What do you think is the current state of the crypto markets?

Crypto went from the promise of a secure decentralized currency not controlled by banks with benefits of streamlined and peer to peer payments, to the promise of interoperable decentralized applications, to decentralized finance and new economic mechanisms that eliminated the security that was core to blockchain, to products for influencers, creators, and brands, to community collaboration models. Each cycle brought in more users for the promise of what could be, however blockchain has yet to see the point when its features go beyond promises and actually deliver an easier, more effective way to do things for real people.

E-Crypto News:

Laws and regulations are good for crypto. Don’t get me wrong, getting into an early ICO in 2015-16 and exiting before it dumped was a very profitable strategy for many, however without regulations it left millions of users that wanted to support a new sector with broken promises and a bad taste in their mouth when they heard “crypto” from then on. Regulations would have prevented this. They are good for adoption and innovation within the sector and for blockchain as a whole. The space is still riddled with bad actors including North Korea who not only deploys hackers to take billions of dollars from real people, but also launder money and participate in other nefarious dealings without any recourse. In a non-regulated market, we see pump and dumps from social media influencers and poor risk management and outright fraud from some of the largest entities in the space (i.e., FTX). It could be argued that regulations would have prevented the FTX scandal. Regardless, I am not expecting much positive momentum as long as regulations remain uncertain, especially from the side of the US.

If you are new to the space, there are many ways to lose your money in cryptocurrency tokens, below are a few:

— fraudulent actors

— pump and dump schemes

— wallet hacks

— smart contract hacks

— anonymous founders (i.e., lack of accountability)

— regulatory risks

— adoption risk

— competency of founders to address stated problems

— custody risk (centralized exchanges misusing funds – e.g., FTX)

— losing your private keys

As it becomes exponentially harder to mine bitcoin (i.e., Bitcoin halving every four years), the price of Bitcoin has increased on a similar curve. This however reached an inflection point since the previous halving in 2016 as we have not seen as much of a multiple largely due to lack of utility of the Bitcoin network versus other chains like Ethereum. This could change with the recent lightning upgrade and put us on track for another parabolic run up however this could also be contingent on regulatory concerns to ensure another FTX scenario does not occur since Bitcoin was one of the most leveraged assets in the last bullrun.

CBDCs enable central banks to control the money supply much more effectively and also removes a significant amount of risk in cross border payments while adding transparency to traditionally clunky systems.

Previously, my answer would have been none. However, since 2018, traditional financial institutions have become much more intertwined with crypto on both the start-up side as well as the financing side. Centralized exchanges have since ballooned given their ability to print money without much oversight over the 2019-2021 bullrun. It hit an inflection point however when LUNA went down taking down with it Voyager and BlockFi. And since then the cascade of events exposed FTX which eventually led to the closing of Silvergate and lack of trust in institutions like SVB causing a bank run when times were uncertain. Now we see the Fed and FDIC stepping into the traditional banking sector in a big way as public trust in banks and financial institutions continues to erode.

Crypto is just a currency. Crypto is actually a technology which has far more use cases.

Smart contracts enable cryptocurrency tokens to become programmable money. This means that people are able to set parameters on how their money is spent, where they spend it, who can have it, and how it is used. This also enables data to be packaged, valued, and spent just like money would be, opening up the doors for many possibilities and future use cases. By eliminating the need for lawyers, underwriters, accountants, CPAs, and more these processes become much cheaper and faster than traditional methods.

Traditional alternative investments like gold or real estate are physical goods that are used by people and industries which is how their value is derived. Cryptocurrency on the other hand is largely made up of tokens with perceived value with little backing them. Some cryptocurrencies however represent tangible assets like gold or even real estate. Others are required for use of a software, platform, or network. These are more commonly referred to as digital assets.

E-Crypto News:

The crypto industry is introducing new forms of value transfer, financial products, and investment opportunities that can no longer be ignored by large institutions and governments. Key priorities include tokenization of real world assets and CBDCs, respectively. It’s also disrupting traditional banking by offering decentralized alternatives to lending, borrowing, and asset management. This shift is forcing financial institutions to adapt, innovate, and reevaluate their value propositions in a world where digital assets are becoming increasingly important. 

Initially, institutional investors were skeptical and cautious about the crypto space, viewing it as a highly volatile and risky venture and it still is for the most part. However, as the industry has matured, we’ve seen a growing interest among institutions in the potential of digital assets as both a hedge against inflation and a source of long-term growth particularly with investments in Bitcoin and Ethereum networks. Groundwork is still being laid, but it’s safe to say that institutions see the long term value and so do their investors.

Over the past year, we have seen the closing of banks, entrance of the Fed, closing and bankruptcy of major exchanges, and enforcement actions by the SEC and CFTC. However, crypto is trending up and we are seeing more upgrades to the majority of networks than ever before. The outlook is positive to say the least.

The long-term outlook for crypto is promising, but success will be determined by mainstream adoption. And my assumption is the adoption will not look like “today’s” crypto/web3 environment.

DeFi has the potential to significantly disrupt traditional finance, but it is unlikely to completely replace it. Instead, we are already seeing a convergence of the two systems, with groups like JP Morgan and Blackrock coming in and building and investing in products across DeFi.

StandardDAO is also empowering the next generation of change-makers through its BattlePACs initiative. By providing mentorship, funding, resources, and networking opportunities, we are fostering a global community of young leaders dedicated to tackling social, economic, and environmental challenges head-on.