What Comes After Bitcoin - Chainlink co-founder Sergey Nazarov
Chainlink co-founder Sergey Nazarov argues that crypto now has bipartisan US government support, creating an opportunity for American blockchain leadership. He says tokenization of real-world assets will dominate, potentially reaching hundreds of trillions in value, while cryptocurrencies remain smaller by comparison. Success requires secure financial products, better user experience, and regulatory clarity around stablecoins and market structure.
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I think crypto will actually be one of the few issues that the Republicans and Democrats can agree on now as being very positive for the economy and positive for the US financial system. What's happened over the last four something years is that the industry was unfairly depressed. It was depressed in a way that it didn't develop in the United States. So the US Wants to be the place where you generate the most reliable, highest quality assets, period. Yeah, it was extremely positive. I think the thing that struck me is not even that just the President was there, but that the Treasury Secretary, Secretary of Commerce, two of the leading members of Congress were there, Tom Emmer and Brian Stile. So very, very, very senior people that stayed throughout the event were very receptive to hearing the industry participants views, had their own views that I think were pretty thoughtful that they shared and were in active discussions with us before and after the event. So I think it's actually very, very positive. Not just because the President sees this as a priority, but because the Cabinet ministers are there, because the Congress representatives are there. So it's really kind of a united effort now to solve this problem, which is the type of alignment and bipartisan and joint support that you need to really get something done in D.C. not a ton of issues in D.C. have that level of support and more importantly have that level of bipartisan support. I think crypto will actually be one of the few issues that the Republicans and Democrats can agree on now as being very positive for the economy and positive for the US Financial system. I think what's happened over the last four, four something years is that the industry was unfairly depressed, right? It was, it was depressed in a way that it didn't develop in the United States, in a way that it did develop in other economies and countries like Singapore, Hong Kong, the Emirates and other places. And so that realization by the people in charge of the government is very important because they understand that in some key dimensions like stablecoin regulation, market structure and others, they're a little bit behind. That's why they have the stablecoin bill, the market structure bill, which is making a lot of progress and moving well through the legislative process. So I would say that it's more about A catching up and then B, being in a place where whatever happens next makes a lot of sense. From the point of view of the US becoming a dominant player in the global financial system. As that financial system goes from being Internet based to web3 based, the US had a huge advantage because Internet infrastructure was basically being built in the US five to 10 years ahead of any other country. That isn't necessarily the case now in the blockchain infrastructure world, because blockchain infrastructure is equalizing force. So the US really has to push its other two advantages of a very strong domestic market and the ability for it to create these highly reliable financial assets. And this is what I think the administration and the people in the legislature are now starting to understand. With our help and with others help, they're very receptive and that's definitely the right thing to do because the US really has to accelerate from here very quickly. I think they waited this thing out until they got to a favorable administration and that made all the difference. If they waited this out and there was a different administration, they'd be in a very different situation. But they waited it out, they extended it to the point where they got to an administration and a new regulatory regime that showed the whole thing to be a non issue. And so they're in a fantastic position now, I think so. Good for them. Great job, Brad. That's my reaction. Great job. Yeah, absolutely. We've seen, I think, a huge acceleration in the value that's flowing into tokenized funds in the amount of tokenized funds, in the amount of other categories of real world assets. I mean really, it's basic arithmetic and it's also very basic, like historical fact. If you look at the Internet, there was a period of time when the Internet was about email cryptocurrency. Consumer experience is email and the blockchain and the Oracle network and the smart contract technology stack is the Internet. So I think it's historically very common and in our case very natural that if cryptocurrency goes from 3.5 to 7 or 10, then the tokenization of all commodities, equities, currencies and other types of assets is hundreds of trillions. I mean, just the mathematics are inescapable here. Just completely inescapable. Unless we're going to say that instead of everyone's portfolio being 10% crypto and 90% other assets, it's going to be 90% speculative crypto assets and 10% real assets. But that's not what anyone's saying, right? We're saying that 80 to 90% of everyone's ownership of assets will be real world asset based. So at that point what you'll have is what I said a minute ago, where you'll have hundreds of trillions tokenized and then you'll have, you know, 10 trillion in cryptocurrencies. And at that point, by definition, our industry will not be about cryptocurrencies. Just like by definition the Internet stopped being about email when other forms of Internet traffic surpassed email. It's pretty obvious to me that our industry is going to be defined by these real world assets. By volume, by value amount, by total value, by aum, by whatever metric you want. And at that point this industry will no longer be about cryptocurrency, it'll be about these RWAs. I think we're going in the right direction from the strategic direction of the industry and the legal direction of the industry. I think our industry consistently needs more and more secure systems, better user experiences. So I think the security and reliability of the financial products in our industry define how the world views them. So if you have more situations like Terra or more situations like ftx, for whatever collection of reasons, whether you're hacked or you there was a mismanagement of the underlying assets or you have more hacks like Bybit, so if there's more security issues, if there's more loss of user funds for whatever collection of balance sheet decisions, that will slow down the industry and that'll force the legal process to go from being very pro crypto to being anti crypto. From a consumer protection point of view, what we have to do now as an industry is what we've always had to do, which is provide highly reliable, highly secure financial products on chain and insurance products and voting systems. Just, you know, it just has to work. And then the other thing that needs to happen is the user experience for the capital to flow into those highly secure products needs to continue to improve. Like the key management, the seed phrase security problem, the recovery problem of your keys, the sharing of keys in a sharded way across multiple parties to recover. Like the use of a secure element in mobile devices where you can store those keys and reliably, you know, easily now with a fingerprint or you know, face id, interact with that value in a way that's maybe easier than even the banking system. So the user experience needs to improve. What I think will happen now is all the companies that own the user currently, the Robinhoods, the paypals, the Fidelities, the Goldman Sachs, all of these existing institutions and fintechs and apps that currently hold the user's financial life in their hands. If the user experience doesn't get solved in a native way and everyone doesn't want to hold their own private key, that'll be unfortunate and that'll be an issue for, for the decentralization and that'll create the massive influx of capital that everyone is discussing as institutional adoption. Because I think when people say institutional adoption, for many people in our industry, it's not clear. So really, if you're interested in our industry and you're interested in Bitcoin, you should be interested in that dynamic. I think it's just going to be about talking through how does the US financial system accelerate to being the most widely adopted version of Web3? Right. So how does the US financial system generate the best assets and then how does external capital flow into the US Financial system efficiently? Those are the two basic questions that I'm trying to solve in dc. Right. So the US wants to be the place where you generate the most reliable, high, highest quality assets, period, which is what it is now. And as you transition from the current system into the Web3 global financial system, you want to still have that position as the system that creates the best assets. Right. And then your second problem will be how do you automate compliance? How do you get capital from Dubai, Singapore, Hong Kong, Australia, Europe? How do you get capital from there to transact against these assets, to buy the asset, to hold the asset, to resell the asset at a low cost of compliance, at a low cost of transaction fees? And so if you've created the best asset and you've made it the easiest to manage and acquire and resell, you're in a very good position to actually gain share in the global financial system. So that's kind of just a general thesis we have, and we have a lot of solutions to that and we have a lot of experience working with many, many central banks now. It.
