From the Publisher

One of the public spectacles at the end of 2022 was the collapse of FTX, founded by Sam Bankman-Fried, which was followed by a bevy of other firms in the crypto-space. The industry is beginning to emerge from the rubble, offering clues on whether (and how) the innovations embodied in the blockchain technology that underpins cryptocurrencies can be harnessed in pursuit of productivity and greater access in finance and a host of related arenas.

Part of our mission at the Milken Institute is to make economic innovation understandable, resisting hype but highlighting promising change. And financial technology has been a particular focus in recent years. The Institute’s Fin- Tech program, housed in our Center for Financial Markets in Washington DC, seeks to educate policymakers and the public on the impact of new technologies creating competition for traditional finance. The FinTech program promotes responsible innovation that drives financial inclusion while fostering both transparency and minimally intrusive regulation. Even with the crypto meltdown, advances in the financial technology space continue apace. More than 70 countries have implemented initiatives around fintech. Indeed, the promise of mobile payments, distributed ledgers and other advances provide hope that households and businesses will be able to leapfrog past traditional financial systems, especially in the developing world. But to capture that promise in ways that improve lives —and that do not implode in corruption or fraud —both governments and the public need to be kept informed.

The Review plays its part in this. Two articles are worthy of the spotlight here. Six years ago, we published a piece, “Digital Money,” which explained Bitcoin when it first pierced public consciousness. The piece is still well worth reading —or re-reading.

And in this issue, the author of that article, Staci Warden, who is now CEO of the Algorand Foundation, brings us up to date on what is known to insiders as DeFi. In “Decentralized Finance and Its Discontents,” Warden argues that “the weakness of the LUNA protocol and the centralized entities bludgeoned by its downfall do more to bring into focus the merits of decentralized finance than they do to highlight its weaknesses.” She makes the case that after the great crypto meltdown of 2022, the potential for decentralized finance is more compelling than ever.

As the landscape of financial technology evolves, we’ll continue to update you. Meanwhile, best wishes for a thriving 2023.

Conrad Kiechel, Publisher