In the cryptocurrency sector, the past few months have brought dramatic developments of new technologies, markets, and regulations, with major global technology and state actors pushing forward digital currency initiatives.

Deep, fundamental digitalization of the economic system is now well underway. Blockchain infrastructure is shifting from peripheral companies to major nation-state actors. Synthetic, encrypted money tokens of central banks and smart contracts that can represent and tokenize other financial assets and contracts in the real world are on the rise around the Globe.

These rapid changes are leading regulators around the world to tackle an economic system that is beginning to mirror the open, global and connected internet of information and communications. These changes are based on the rapid development of public blockchain infrastructures.

Currently, there are several competing approaches to building a new financial system on this infrastructure.

1. Open Finance

The first approach is represented by cryptocurrency players, including Circle and Coinbase, who are creating stablecoins backed by fiat technology, such as USD Coin (USDC), on top of public blockchains. These developments are enabling a broad base of developers and companies to build higher-level financial models, such as decentralized lending and credit markets, payments services and tools for trade finance. This approach, based on private markets regulated by existing banking rules for payments in the US and EU, is growing rapidly and helps to form a pillar of the open finance movement.

2. Government

The second approach is best represented by the forthcoming Digital Currency Electronic Payment infrastructure of China, which aims to build an entirely controlled, centralized and permissioned infrastructure for a digital currency version of the Chinese RMB. Although this approach is likely appropriate for the Chinese economic and political model, it is contrary to the open internet ethos and is not likely to receive an enthusiastic response from the broader community.

3. Private Consortia

The third approach, anchored in the Libra Association and Libra Reserve Currency, attempts to build an “over the top” synthetic global digital currency. Similarly to China’s efforts, even Facebook’s proposal creates a centralized infrastructure, which will radically limit the openness and accessibility of the infrastructure to developers and companies wanting to build on it.

Competing Worldviews

In each of these approaches, we can extrapolate a fundamental worldview. There are some pitfalls, however.

In the first case, it is an open financial system built on the internet that allows value to move freely and easily anywhere in the world with strong privacy protection.

However, if we adopt the Chinese approach, it will be a world with tightly controlled access to innovation in the financial system, with extremely tight controls on where capital moves and who can access the system.

The third view, put forward by Facebook and Libra, suggests a new global financial system that is controlled and run by the largest private companies in the world. But do we want a new global financial system controlled by a few private companies, where permission to participate and innovate is mediated on a closed infrastructure?