Cryptocurrency is currently the buzz word of the globe .The growth of Bitcoin, Ethereum and other altcoins has tremendously affected global finance and investment trends. As its obvious technological advancements come with its equivalent challenges. No one wants to see things changing all the time. Humans are scared of change, but the cost of ignoring change is more than the cost of embracing change. Opportunists have embraced Cryptocurrency and made huge benefits from it while the fearful and cynics are on a ‘wait and see’ mode.
Does Cryptocurrencies have a future?
In 1994 Jeff Bezos, the world’s richest man started Amazon. It’s the same time the internet was invented. No one ever thought the internet would be what it is today. The cynics talked it down. The common slogan was ‘give it time, it will be no more’. Jeff Bezos Amazon didn’t do much until the year 2000 when the internet hit the world with a bang. Since then the internet has been growing on an upward scale and Amazon is a product of the internet and prove that technology is here to stay.
A lot of negative word is going round that Cryptos like Bitcoin are just bubbles! That when the bubble
bursts, there will be many enthusiasts affected. Many central banks across the globe have discouraged citizens in their respective countries to trade in cryptocurrencies and anyone who does it should be ready to bear the risk.
Some countries like Bangladesh, Bolivia, Ecuador and Kyrgyzstan have banned the use of bitcoin. The fear around bitcoin is that it can’t be regulated and does not measure up to any fiat currency in respective countries. Bitcoin is alleged to be associated with drug trafficking and terrorism activities.
Russia banned all other Cryptocurrencies and started a journey to build its own digital currencies.
In the United States, the Securities and Exchange Commission is considering introducing regulations and measures to control cryptocurrency markets.
The time for cryptocurrencies is now! We are yet to see the full exploitation of the cryptocurrency world. The world of finance, banking and payments will shift drastically.
Regulations and strict measures may make cryptocurrencies hard to trade on in some countries but the more major companies such as Tesla accept cryptocurrencies as payment, the more governments will be forced to accept and integrate cryptocurrency into finance systems.
Some Banks like J.P Morgan Chase in the United States have secretly hired blockchian programmers to start preparing its systems with relevant technologies just in case cryptocurrencies take over the financial systems.
Some governments like Russia and Kenya have formed task forces to look into the Cryptocurrency world so the opportunity does not slip by.
Digital currencies are in their infancy. We are yet to see more advancement into the technology. It’s the current disruptive technology of the globe ‘the nightmare of the old guard’. The fact that Cryptos are not regulated is a huge threat to financial institutions. The World Economic Forum expressed its concern that the Blockchain technology will disorient every process of the traditional financial services.
The completely secure Cryptocurrency Blockchain technology is a worthy consideration for payment gateways retailers. Should more retailers integrate the Blockchain technology, then Cryptocurrencies will gain more momentum.
Opportunities in Cryptocurrencies
A. Coin Development.
The idea behind Cryptocurrency is to solve the centralization deadlock established by central banks in countries across the globe. According to www.coinmarketcap.com there are over 1300 digital currencies. Most of these currencies are scams – quick money making schemes that have not been well thought of. Such coins do not have a future. They will soon disappear from the market when the owners have attained their goals.
The ideal idea of a Cryptocurrency should be to solve a particular problem that physical currencies cannot solve. From an investor point of view, there is no much difference between Cryptocurrencies such as Bitcoin and Ethereum .However in problem solving, Ethereum stands out. The foundation of Ethereum is smart contracts. It’s this aspect of Cryptocurrencies that is exploitable by retailers. One Ethereum application that is under development would let farmers sell their produce directly to consumers and receive payment directly from consumers. This aspect puts lawyers at risk of losing legal fees. The application will make sure if there happens to be a breach of contract between the farmer and the buyer, then the Ethereum network will not process payment.
Other Cryptocurrencies such Siacoin will solve the high cost of cloud storage. Today cloud storage is expensive. Siacoin will reduce the cost by 10 times. According to Siacoin, 1TB will cost $2 as compared to $23 from Amazon S3.
With a clear written white paper explaining everything the coin will do in a lay man’s language. This includes commercial, technological and financial details of a new coin. A convincing whitepaper will increase the stakes of investors. A coin that has been developed through the correct procedures, solves a problem and has a future is a worth investment because it will attract investors.
B. Trading
Currently Cryptocurrencies are more of a store of value virtual commodities than medium of exchange like fiat currencies.
Bitcoin for example has undergone a rapid growth and become an outstanding currency both online and offline. In 2010 the price of a bitcoin was less than a dollar. In 2013 the price dropped from $266 per Bitcoin to $50, then rose to $100, dropped again to $70.In 2017 the price of a Bitcoin moved from $2000 to $7,000 to $11,000 to $18,000 and finished the year at $13,000. Currenlty the price of Bitcoin fluctuates between $7,000 and $11,000.By the end of the year looking at previous price dynamics, a huge high or manageable low may occur.
It’s upon the trader to carry out a market analysis and make an informed choice.
Just like normal business commodity trading, users can buy Cryptocurrencies when prices are low and sell when prices rise making profit. Business laws of supply and demand apply in this kind of trading.
The prices of Cryptocurrencies may go up and down depending on market dynamics but the asset value still remains. This is an aspect that millionaires understand. For example an investor will buy a Cryptocurrency when it’s at a high then a huge drop in price happens. With time the price will still go higher again because market dynamics don’t remain constant for a long time.
Before you invest in any Cryptocurrency ask the following basic questions
What is it?
– Who are the founders?
– What technology is used on it?
What problem does it solve?
What’s the future of it?
Should I invest?
How much does it cost?
What are past price trends?
C. Exchanges
Exchanges are online platforms where trading of digital currencies takes place. On such platforms users can buy Cryptocurrencies using fiat currencies, exchange one currency to another and store currencies in virtual wallets.
Such platforms charge transaction fees which is a huge source of revenue owing to the huge number of transactions curried out in a day. Some exchanges like Coinbase have had a sum total of over $50 Billion transacted on its platform. With its minimum commission charge of 1.49% for every transaction, let’s assume half of the transactions were deposits then $749 Million is revenue generated. That’s a huge fortune.
We are yet to see the full potential of Cryptocurrencies. With the exploitation of the technology a lot of new aspects in technologies and opportunities will definitely be born.