Expert Q&A: Why we should all care about how cryptocurrency is reshaping finance

Blockchain and cryptocurrency are revolutionising finance as we know it. In this exclusive Q&A, Imperial College Business School Professor of Finance and author of the book Blockchain, Crypto and DeFi: Bridging Finance and Technology, Marco Di Maggio, dives into how these technologies are reshaping our world and why it matters beyond the world of tech enthusiasts and financial insiders. 

What impact have blockchain and cryptocurrency had on traditional finance?

Blockchain and crypto aren't just buzzwords anymore — they're shaking up finance. Decentralised finance (DeFi) isn’t about fancy investments, it’s about tearing down the walls of traditional finance. No more Goldman Sachs gatekeepers while the rest of us try to catch up. Now, anyone can take the wheel. Want to earn yield on Uniswap? Go for it. Need a loan without a credit check (but zero credit risk)? Done. DeFi is changing the structure of financial interactions, making financial services accessible everywhere — from New York to rural Kenya. It’s a real-time revolution, and everyone’s welcome.

And it’s not just finance. The Lemonade Crypto Climate Coalition used blockchain to provide climate insurance to nearly 7,000 Kenyan farmers — automated payouts, no paperwork, no middlemen. It’s real-world impact, solving problems traditional finance overlooks. Blockchain isn’t a future fantasy, it's already making a difference.

What are the most common misconceptions about these technologies?

In my experience, myths arise from misunderstandings or a stubborn refusal to adapt to a changing financial landscape. For instance, there's a misconception that crypto is just for criminals, yet according to Chainalysis, illicit activity accounted only for 0.34 per cent of total cryptocurrency transaction volume in 2023, down from 0.42 per cent in 2022. Also, blockchain and Bitcoin are not the same thing: blockchain is the underlying tech powering countless applications beyond Bitcoin and other cryptocurrencies. One can be bullish about the underlying technology without being a Bitcoin believer. Finally, crypto is often seen as valueless, but its value lies in utility, scarcity, and trust. 

How important was crypto in the 2024 US presidential election?

Crypto has gone mainstream — and politicians know it. Following Donald Trump's US presidential election win in 2024, the crypto market went stratospheric, with Bitcoin reaching an all-time high of over $90,000 and an expectation that future regulations can finally be shaped by an understanding of crypto’s true potential. We now have Trump and Musk, two of the world’s most polarising figures, talking about crypto — and that is huge. When they support crypto, it brings attention, legitimacy and curiosity from the masses. For better or worse, they’re driving conversation — and that’s exactly what the space needs to grow.

Will blockchain and crypto always be niche technologies?

Not really. Millions of people are already involved in blockchain today, which makes it far from niche. Over the next five to 10 years, we’ll see more user-friendly interfaces (think apps as simple as today’s mobile banking), clear regulations, and further adoption, with increased education and awareness. 

It will also stretch way beyond finance. For instance, at the forefront of innovation is the intersection of artificial intelligence and crypto — less talked about in mainstream media, but it’s where some of the most exciting and often converging developments are happening. AI-driven smart contracts, autonomous financial systems, and data marketplaces are just a few examples.

These changes will gradually bring blockchain and crypto into our daily lives, making them less mysterious and more accessible. The goal is to stop talking about the underlying technology, much like what happened with the internet — where we now focus on its applications rather than the tech itself.

Can blockchain and digital currency fight financial fraud?

Absolutely. Look at the 2016 Bitfinex hack: $72 million worth of Bitcoin was stolen. Thanks to blockchain’s transparency, authorities traced transactions, and in 2022 they seized $3.6 billion worth of the stolen funds. Blockchain creates an unalterable record, making it actually harder for criminals to cover their tracks. Traceability, permanence and transparency are game-changers in combating fraud — though we still need to address emerging tricks like chain-hopping. It’s not perfect, but it’s a powerful tool in law enforcement’s arsenal.

How can DeFi bring positive changes – and what are the challenges?

DeFi is solving real, tangible problems. It’s also enabling rapid financial innovation that caters to diverse needs — whether it’s earning yield through liquidity provision or taking out instant loans. Take automated market makers like Uniswap, which have revolutionised liquidity by removing the need for traditional order books. Then there are flash loans — instant, uncollateralised loans that allow arbitrage opportunities and sophisticated financial maneuvers that were previously impossible. These innovations are addressing real frictions in the financial markets, but they’re often overshadowed by the price hype.

But there are challenges too: smart contract vulnerabilities that can lead to big losses, scalability issues that need to be addressed to handle mass adoption, and liquidity fragmentation across different platforms. The good news? These challenges are being actively tackled. DeFi has enormous potential — it’s all about continuing to address these challenges, just as we have with every groundbreaking technology in history.