The adoption of artificial intelligence is set to supercharge the use of cryptocurrencies globally, the former head of the world's largest crypto exchange Binance said.
Technology is growing rapidly, which in turn will support the use of blockchain, Changpeng Zhao, commonly known as CZ, said at the FinTech Forward event in Bahrain on Thursday.
“I think AI is going to drive crypto like crazy. AI will facilitate like, 1,000 or a million times more transactions for everyone in the world,” he said.
“AI can only use a blockchain; it is not going to be able to use credit cards … so AI is different as a tool, but finance will happen on the blockchain. I think there are many, many different areas for growth.”
Cryptocurrencies, as an asset class and as a means of transaction, are also very secure, although there are many “misconceptions” about illicit activity in the industry, Mr Zhao told delegates at the event.
“Every time something bad happens using crypto, then it's [in the] headlines. But if you actually look at the numbers, the percentage of transactions that are bad in crypto is extremely low. I think it's less than 0.1 per cent or something, whereas in traditional finance, the percentage is 2 per cent to 5 per cent,” he said.
The fact that crypto is extremely traceable means that “it's actually much easier to conduct law enforcement using blockchain”, he added.
US adoption of Crypto
Legitimacy is also coming from the US government adopting crypto. The world's largest economy has this year introduced a slew of cryptocurrency legislation in line with America's aim to be the global leader in digital assets.
The Clarity Act, the Anti-CBDC Surveillance State Act, and the Genius Act, are among the legislative moves intended to prioritise consumer protection and strengthen the US dollar’s reserve currency status.
Countries in the Gulf region, however, are leading global efforts when it comes to crypto regulation, he said.
“Bahrain is one of the leading regulatory bodies in the whole space, but many people don't know about it. And I think the UAE is very strong as well. Abu Dhabi, Dubai, they're very forward thinking,” he said.
Bahrain was one of the first countries in the region to regulate the space. The Central Bank of Bahrain introduced a regulatory framework for cryptoasset services through its Crypto-Assets Module, which provides a legal and operational framework for cryptoasset providers.
The UAE has also taken steps to encourage the adoption of cryptocurrencies and build robust frameworks and legislation. Dubai's Virtual Assets Regulatory Authority and Abu Dhabi’s ADGM are leading crypto adoption efforts in the UAE, the second-largest economy in the oil-rich GCC economic bloc.
The Gulf's cryptocurrency market, which was valued at $744.3 million last year, is projected to grow at a compound annual growth rate of nearly 17 per cent to exceed $3.48 billion by 2033, according to an Imarc Group report.
“The market is experiencing significant growth, mainly driven by increasing digital transformation, government blockchain initiatives and rising interest in decentralised finance,” the report said.
“With robust internet penetration and a tech-savvy population, the GCC is emerging as a key hub for cryptocurrency adoption and blockchain technology development,” it added.
