If the Internet were Mosaic, it would be a public-funded system used by academics and researchers. Then enlightened policymakers legalized commercial use. Until then, most people had no idea how to use it. Then, rails were put in place to make the experience more convenient and simple. Today, the conditions are perfect for greater economic inclusion and freedom, but uncertainty about the government’s approach to cryptocurrencies remains.
Bitcoin
While there is a lot of talk about the benefits of cryptocurrencies, there is also a lot of controversy around them. Cryptocurrencies are a form of decentralized finance. As the popularity of cryptocurrencies grows, more mainstream companies are showing interest in investing in them. Tesla, a famous electric car company, recently announced that it will accept bitcoin payments. PayPal and Square are also betting on crypto, and Tesla is back and forth on whether to accept Bitcoin payments. Regardless of how these two sides view the future of crypto, experts predict more mainstream companies will soon be buying in.
Despite its high popularity, crypto prices are still too volatile to invest in. While some investors are hesitant to invest in BTC, there are other options that are less volatile. While it might be risky, BTC is the first crypto to be analyzed for investment purposes. While it doesn’t have the highest upside potential, it does have the strongest downside protection, a loyal investor base, and a wide range of uses. Currently, BTC is hovering around $30,000, but it has dropped 16% in May. But BTC has performed better than most coins in May.
Alternative Cryptocurrencies
Bitcoin is the most popular cryptocurrency. Other cryptos that aren’t Bitcoin are known as “altcoins” or alternatives to Bitcoin. Although Bitcoin is still the leading cryptocurrency, many other altcoins have also gained in popularity. They are similar to Bitcoin but use different technologies and have different risk characteristics. Some are more secure than others and have a limited supply of coins. Bitcoin has a monetary schedule that’s disinflationary. Some investors use Bitcoin as a hedge against inflation.
Regulatory policies regarding cryptocurrencies are also complex, but lawmakers are moving to address these issues. The United States Securities and Exchange Commission and the emerging DeFi sector are moving to regulate cryptocurrency. But cryptocurrencies do not fit neatly within existing regulatory frameworks, so lawmakers will have to work out the ambiguities and establish a new framework. SEC Chairman Gary Gensler recently called the cryptocurrency sector a “Wild West,” and has called on Congress to give the SEC more power to protect investors. Federal Reserve Chairman Jerome Powell has also called for stricter regulation of stablecoins.
Blockchain Technology
During the last year, blockchain technology has made significant strides and has found widespread adoption. Its popularity among companies is increasing with no signs of slowing down anytime soon. Approximately 76% of executives expect digital assets to be a global finance alternative in the next five to ten years. Blockchain technology has the potential to disrupt the $5T+ banking industry by disintermediating key services. Its decentralized design enables low slippage on any chain.
The use of blockchain technology is proving to be an innovative way to reduce cybersecurity risks by eliminating intermediaries. Distributed ledgers can also eliminate the need for intermediaries, which could dramatically reduce the costs of dealing with cryptocurrency. This technology can even improve the security of transactions. For example, smart contracts can automate service-level agreements between roaming coverage partners. Moreover, messaging platforms have begun to incorporate crypto-related capabilities, including cryptocurrency payments. For example, Signal, a popular encrypted messaging service, is planning to introduce cryptocurrency payment features.
Institutional Involvement
Today, more institutional investors are making significant investments in cryptocurrency. These investors include major corporations, family offices, insurance companies, asset managers, and university endowments. In fact, since 2020, Bitcoin has seen a large amount of institutional buying, through CME futures, the Grayscale Bitcoin Trust, and direct trading on exchanges. This type of participation is a good sign for the future of cryptocurrency. But how will institutional investment affect the market?
Currently, there are some key steps that institutions must take to be comfortable in investing in crypto. First, they must be assured that the regulatory frameworks are robust enough. As institutional investors, they have fiduciary responsibilities and must ensure that they are trading with sufficient liquidity and security. However, the process of securing institutional investment in cryptocurrency is slow. While there are some institutional investors in the crypto space, this number is still minuscule compared to the potential of the entire industry. Institutional involvement is a critical step in bringing more legitimacy to the cryptocurrency industry.
Traceability
Blockchain technology can be a great tool for food safety. Consumers are demanding more transparency from their seafood suppliers, and blockchain offers the possibility for traceability. For instance, the food company Pacifical is using blockchain technology to trace yellowfin tuna back to its source, so consumers can ensure that the product is as fresh as possible. The blockchain is a decentralized, open platform, and it can be used to trace food from farm to can.
Blockchain technology provides a means for the public to see where every product comes from, and it helps businesses improve their employee accountability. The data is transparent, and every stakeholder can update it without the need of an operator. As such, Blockchain is already helping businesses optimize their processes and reduce risks. But blockchain technology can also be used to improve customer service. In fact, it is being used in a variety of industries. While the future of cryptocurrency is unknown, it has already made many positive steps toward the crypto industry.
Regulation
Recently, the UK government introduced new regulations on cryptocurrency exchanges, bringing them under the remit of EU anti-money laundering laws. These new laws include enhanced requirements for cryptocurrency exchanges, including conducting KYC and fulfilling standard reporting obligations. In addition, new regulations will come into force in FY2022, and will place greater restrictions on the management of users’ virtual money. In addition, the new regulations will bring cryptocurrency custody service providers under the PSA and FIEA.
Although the regulation of cryptocurrencies is necessary, some experts say there are many legal challenges associated with their use. For instance, it’s hard to determine what laws apply in different jurisdictions. While the US President has signed an executive order stating that the federal government should regulate the cryptocurrency market, the issue of implementation has not been resolved. Despite the recent executive order, it remains to be seen how the federal government can bring about meaningful regulation of the cryptocurrency industry. The challenge is in getting tax and financial authorities to coordinate.
