(Kitco News) – As the crypto winter drags on, there are still areas of the blockchain ecosystem that are thriving beneath the radar. Alexander Filatov, Co-Founder and CEO of EverX, spoke to Kitco News anchor David Lin about how investors can navigate the crypto hype cycle, how DAOs might help prevent the next FTX-type event, and where NFTs can create real-world value.
Government adoption trends
One area where Filatov sees progress is in the public sector. He said that governments around the world are discovering interesting applications for blockchain technology, including central bank digital currencies (CBDC), identity management and voting. “I think governments are discovering that there is something about the technology that can bring more functionality,” he said. “If we talk about CBDCs, you can program the money, and you can enable more traceability.”
Filatov sees two trends driving government blockchain adoption. “One is the desire to control decentralized space,” he said. “And then the desire to embrace the technology, to bring more programmability-slash-functionality, and also more transparency and control into the financial system.”
NFTs will get real
Filatov also sees a different future for NFTs, one more rooted in real-world applications than their speculation-driven heyday, especially with the advent of AI-driven creative processes.
“When NFTs really blasted in the spring of 2021, you’ll remember that you could generate collections of rocks, monkeys, frogs, you name it, and everybody could see that this was just a short-term hype,” he said. “Now that you have technology like Midjourney or some of the other things like that, where you can generate amazing collections in minutes, it just doesn’t make sense. The future of NFTs is utility, it has to bring the real utility component to make sense.”
Filatov sees several areas where the programmability and robust ownership components of NFTs can solve real-world problems. “FIFA has been struggling for years that people don’t resell their tickets. I was just in Qatar for the FIFA World Cup event, and it’s still not solved,” he said. “With blockchain you can program resellability, you can program certain rules, if you want you can build in royalties, etcetera.”
For artists, he said NFTs offer a new way to eliminate intermediaries. “For example, a famous artist can just, using the modern marketplace, issue his or her own tickets and do the concert in the metaverse, selling the tickets as NFTs, and there are no producers, there are no intermediaries, there are no ticketing companies, nobody. It’s just an artist and the users.”
Big brands coming aboard
Filatov noted that corporations and big brands are beginning to discover how NFTs enable them to cater directly to their customers and fans, and he believes use cases will become more sophisticated as the industry develops.
“Football clubs for example, and Starbucks, and Playboy, all of them have tried with NFTs in the last year, to a different degree of success,” he said. “Many of them failed because they were rushing, I think, and not thinking enough about the utility, but it’s just the start.”
DAOs can prevent mismanagement and fraud
He also thinks distributed autonomous organizations, or DAOs, could make a significant contribution to the crypto space on the governance side. “We all saw the failures of centralized decision making systems, and I don’t want to come back to FTX, but it kind of was a little bit of a one-man show,” he said. “So what DAOs allow you to do is to move away from centralized decision-making and potential misbehavior to decentralized decision-making and consensus-driven decisions. And hopefully more transparency, trust and security as a consequence of that.”
Moving the blockchain forward
Asked what he believes is holding back the growth of the crypto ecosystem, Filatov said that while the broader market plays an important role, developers can go a long way toward helping adoption of new tools and technologies.
“The biggest factor of course is the global financial system,” he said. “With interest rates in the US climbing, it’s just natural that people will move their money away from more speculative sectors.” Filatov acknowledged that the blockchain and crypto space, like high tech, is still very risky. “I think the minute funds start coming back from more defensive segments of investment into more risky segments with higher yields, I think we’re going to see the reverse of that.”
The second major factor is adoption, which he believes will improve as applications become more intuitive and user-friendly. “We are still talking about 100 million users using blockchain-slash-crypto more or less regularly,” he said. “And that [adoption] is being taken care of by constantly improving UI and UX. I remember when I first tried some of the wallets and exchanges in 2016, it was horrible. From the UI, UX standpoint, it was like the internet of 1993 or something. Now we’re in the internet of maybe 2000, with much friendlier UI and better UX.”
To learn which crypto market segments Filatov believes are poised to grow in 2023, watch the above video.
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