Pro 31

Bakkt Raises $182.5M From Microsoft And Other Big-Name Investors

Bakkt on Monday announced the completion of its first funding round, to the tune of $182.5 million. The platform which aims to offer the first-ever Bitcoin-settled futures contracts in the coming year says it is going ahead with its plans irrespective of the current market conditions.


$182.5 Million in Funding From High Profile Investors

In a Medium post published on Monday (Dec. 31, 2018) by the Bakkt CEO, Kelly Loeffler, the company announced that it had successfully carried out its first funding round. According to the announcement, 12 investors participated in the capital raising exercise.

The CEO notes the investors including some big names, namely:

The partners and investors in the first round include Boston Consulting Group, CMT Digital, Eagle Seven, Galaxy Digital, Goldfinch Partners, Alan Howard, Horizons Ventures, Intercontinental Exchange, Microsoft’s venture capital arm, M12, Pantera Capital, PayU, the fintech arm of Naspers, and Protocol Ventures.

Bakkt Moving Ahead Despite Bear Market

For Loeffler, the status quo remains unchanged despite the prolonged bear market that characterized the cryptocurrency space in 2018. The company intends to continue its drive for proper onboarding of clients, as well as, collaborating with relevant business partners.

New York Stock Exchange Owner to Launch Bitcoin Data Service

Reinstating Bakkt’s commitment and resolve to the process, Loeffler, said:

We have worked to build new markets and products many times before. Those of us building Bakkt have earned our stripes by helping advance markets in once-nascent asset classes, from energy to credit derivatives and, now, bitcoin. The path to developing new markets is rarely linear: progress tends to modulate between innovation, dismissal, reinvention, and, finally, acceptance.

According to Loeffler, focusing on the BTC price 00 action is a distraction from the groundbreaking developments happening with Bitcoin as a whole. The Bakkt CEO also noted that paradigm-shifting technological breakthroughs have a long incubation time and price isn’t always the best metric for gauging growth.

Notably, 2018 was the most active year for crypto in its brief ten-year history. This was evidenced by rising investment in distributed ledger technology and digital assets, as well as by blockchain network metrics such as daily bitcoin transaction value and active addresses. Yet, these milestones tend to be overshadowed by the more narrow focus on bitcoin’s price…

Bakkt Postponed From January to ‘Early 2019’

Bakkt and the Commodity Futures Trading Commission (CFTC) continue to work out modalities for the launch of the BTC-settled futures contracts. However, the current government shutdown in the United States looks like it has pushed back the January 2019 launch to “early 2019.”

The official statement published on December 31, reads:

Following consultation with the Commodity Futures Trading Commission, ICE Futures U.S., Inc. expects to provide an updated launch timeline in early 2019, for the trading, clearing and warehousing of the Bakkt Bitcoin (USD) Daily Futures Contract. The launch had previously been set for January 24, 2019, but will be amended pursuant to the CFTC’s process and timeline.

While awaiting CFTC approval, the platform says it will continue to onboard customers while firming up its institutional-grade infrastructure.

Do you think the signs are good for Bakkt following this successful fundraising round? Please share your thoughts with us in the comments below.


Image courtesy of Twitter (@Bakkt), Shutterstock

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Pro 30

New Survey Finds 40% of Chinese Want To Invest In Bitcoin

A new survey asked nearly 5000 Chinese people about their familiarity and interest in cryptocurrency. The results of the survey show that two in five or 40 percent wanting to invest in bitcoin, despite the current bear market.


Subject Knowledge

The survey found that 98 percent of the respondents had heard of at least one concept related to cryptocurrency or blockchain.

Although, only 50 percent said they had heard of cryptocurrency, digital currency or bitcoin, and 42% had heard of blockchain. One would imagine a very high level of crossover in these two groups, so it is unclear what the other 48 percent had heard of.

Only 20% of those who have heard of blockchain claim to have an understanding of the technology. Half of these were millennials, suggesting a greater level of crypto-interest amongst this group.

Indeed, the affinity for digital payments among the millennial generation alongside a deep distrust in banks following the ’08 financial crisis may be setting the stage for Bitcoin adoption to happen naturally.

In November, Bitcoinist noted:

[I]n 8 years, there will be no person under 18 years old who have lived in a world without Bitcoin, which has been working flawlessly their whole lives. This will be the reality for everyone born in 2009 and beyond.

Their trust in bitcoin will be as profound as their trust in gravity.

Invested In Crypto

14 percent of survey respondents had invested in cryptocurrency. Of these, one in five have little knowledge and only know about Bitcoin, two in five know about mainstream cryptocurrencies like Ethereum and EOS, and two in five have knowledge of other altcoins.

China’s First Bitcoin Documentary Premiere

Influencers play an important role in the spread of cryptocurrency awareness. Nearly 40% of those polled had discovered crypto through online celebrities. 25 percent learned about crypto through friends and relatives, whilst 20 percent became aware through media coverage.

Age Appropriate

60 percent of those who had invested in cryptocurrency was in the 19-28 age range, with most having invested between 10,000 and 100,000 yuan ($1450 – $14,500). Most of this group invested after the 2017 bull-run, so will likely be nursing some major losses.

Despite this, 40 percent of the survey respondents said that they would invest any spare funds in cryptocurrency in the future.

Barriers To Entry

However, almost 60 percent of respondents said they were scared off by complicated procedures when using wallets or exchanges. A similar number believe that they don’t need crypto as a means of payment, due to existing mobile payment options being pervasive in the country.

Despite these misgivings and the ongoing legality issues, the survey claimed to be the largest of its kind, seems to indicate a bright future for crypto in China.

What do you think of the survey’s findings? Share your thoughts below! 


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Pro 26

Perfect Storm: Bitcoin Didn’t Exist in the Last Financial Crisis

Bitcoin has been quietly preparing for over a decade for the next market storm as a non-political alternative to the money printing pyramid.


Bitcoin Separates Money and State

Bitcoin was forged by the last great financial crisis of 2008 and designed to thrive in financial turmoil.

“Bitcoin adoption has always been driven by bank failures, bailouts, bail-ins, and political unrest,” said Max Keiser in an interview with Bitcoinist earlier this month.

It’s certainly no coincidence that Satoshi Nakamoto left a message in the first ever mined Bitcoin block —known as the genesis block. It famously contains the dated title of an FT article:

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.

The anonymous creator hints that Bitcoin is a non-political alternative to the existing financial system. The Bitcoin whitepaper could, in fact, be interpreted by some as a declaration of the separation of money and state. 

Bitcoin was an inevitability  a solution to downfalls of the trust-based monetary system — in which central banks and governments have historically abused that trust at the expense of the public.

For almost fifty years now, the de facto global currency has essentially been running on ‘full faith and credit’ only. The problem is that when this faith is tested by the markets (i.e. reality), credit-fuelled bubbles are exposed. When they go pop, liquidity dries up and cash once again becomes king.

Bitcoin: Trust Buster

So it’s no surprise that cash injections — euphemistically known as QE (Quantative Easing) — have become the preferred drug prescribed by central banks to fuel the longest bull market in history. 

At the same time, the demand for the US dollar hasn’t waned but actually risen. This phenomenon may have impacted the price of bitcoin 00 this year, according to Keiser.

“The problem Bitcoin has had recently is its competitor, the US Dollar, has been rising,” he explains.

When the dollar rolls over and starts dropping, Bitcoin will hit new ATH.

Meanwhile, critics say it’s too volatile to be a safe haven alternative. Its price has admittedly dropped by 85 percent from its all-time high in 2017. But proponents, like Max Keiser and many others, argue that short-term price fluctuations do not matter if the legacy fiat monetary system is inherently flawed.

They also note that savvy investors are realizing the long-term value proposition of holding the world’s most politically-neutral, hard form of money.

Simply put, trusting no one pays off for those who wait.

Bitcoin Transfers Value From the Sodler to the Hodler

Saifedean Ammous, economist and author of the Bitcoin Standard, states that Bitcoin’s attributes, particularly immutability and neutrality, make it attractive to investors with a long-time preference.

saifedean

Saifedean Ammous

He explained:

Bitcoin has already gone through 9 years of growth out in the wilds of the internet, mostly without a central planner in charge of it after its creator disappeared. It grew because it offered utility to enough users and developers to keep maintaining it.

It has weathered attacks and hacks and ‘community conflict’ and plenty of powerful interests and questionable characters trying to bend it to their will. After all of this, Bitcoin can indeed claim to be immutable. Once it became clear Bitcoin was successful at doing this, then anyone who was interested in an immutable digital hard money could use it.”

Coinbase President Asiff Hirji, whose San Francisco-based exchange launched a custodial platform for institutional investors earlier this year, also sees Bitcoin and cryptocurrencies rewarding the patient in the future.

According to Hirji, none of Coinbase’s investors speculated on BTC price when they valued the exchange at $8 billion earlier this year. They weren’t betting on what the price will be “today, tomorrow or even a year from now,” he said 

“If that’s your time horizon, as an institutional investor, you shouldn’t be touching this,” adds Hirji.

Fragile Fiat

From a security standpoint, centralized money systems are also honeypots. Centralized infrastructure is prone to hacks and shut down compared to a much more robust decentralized network like Bitcoin, which has been operating 24/7 with 99.8 percent uptime.

What’s more, third-parties aren’t just security holes. They are also structurally political. A duopoly such as Visa and Mastercard, for example, can (and do) restrict access for their own reasons, and even have the power to push other companies to toe the line.

bakkt earnings season Wall Street's Old Guard Has A Double Standard When It Comes To Bitcoin

The next global financial crisis is baked into the fiat cake. It’s a matter of not if, but when.

Will Bitcoin be ready? Only time will tell. But with warning signs already surfacing such as global social unrest and the markets tanking, the test may come sooner rather than later. 

Do you consider Bitcoin the perfect long-term investment? Share your thoughts below! 


Images courtesy of Bitcoinist archives, Shutterstock

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Pro 21

Bakkt Bitcoin-Settled Futures Set To Be Approved in Early 2019

Bakkt, a platform for the first-ever Bitcoin-settled futures contract, is expected to be approved by the United States Commodity Futures Trading Commission (CFTC), according to the Wall Street Journal.


CFTC Approval Imminent

According to the Wall Street Journal, Bakkt will soon receive a regulatory green light from the CFTC for its Bitcoin futures contract. The WSJ notes:

The first futures contract that will pay out in cryptocurrency rather than cash is expected to soon get regulatory approval.

Bakkt, owned by Intercontinental Exchange Inc., will be the first to offer a BTC-settled futures product.

The Chairman Of The CFTC Might Just Have Brought The Bitcoin Crash To An End

Both Bakkt and the CFTC have been working together to iron out crucial issues relating to the futures contract. CFTC is also reportedly examining Bakkt’s business plan to determine whether they comply with its regulations.

Another major point of concern has to do with cybersecurity infrastructure. Cryptocurrencies are a target of hackers and other cybercriminals. The CFTC is looking at Bakkt’s security framework and the modalities in place to recover from a possible cyberattack.

Previously, Bakkt had to postpone the launch of BTC futures contracts to 2019 to give more room for proper customer onboarding and warehousing for the product.

In a press released issued by ICE back in November, the company announced that Bakkt would begin trading BTC futures on January 24, 2019. According to available reports, the CFTC will likely vote on the matter in early 2019.

Focus on Price Discovery

For Bakkt, the mechanism of price discovery is a critical issue given that its contract will be BTC-settled and not cash-settled like the ones offered by the CME and the CBOE.

Back in 2017, the appeal of the futures contract provided by the latter two gave traders the ability to place leveraged bets on BTC price 00 movement without having to buy the cryptocurrency itself.

However, the dynamics of price discovery could improve with Bakkt contracts being settled in actual bitcoin to gauge real demand as opposed to placing USD cash bets on BTC price movement. In August 2018, Bakkt CEO, Kelly Loeffler, said:

A critical element to price discovery is physical delivery. Specifically, with our solution, the buying and selling of Bitcoin is fully collateralized or pre-funded. As such, our new daily Bitcoin contract will not be traded on margin, use leverage, or serve to create a paper claim on a real asset.

Apart from Bakkt, Nasdaq has also confirmed that it wants to launch its Bitcoin futures product in 2019 and possibly other altcoins like Ethereum thereafter.

Will Bakkt Bitcoin futures get approved and make Bitcoin price discovery more accurate? Share your thoughts below!


Image courtesy of Twitter (@Bakkt), Shutterstock

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Pro 07

‘Buffett Bet 2.0’ – Investment Fund Puts $1M on Bitcoin to Outperform S&P 500

Asset manager, Morgan Creek Digital, is offering an interesting wager if anyone is willing to take it. It’s willing to bet $1 million, that its Bitcoin-focused Digital Asset Index Fund outperforms the S&P500 over the next ten years.


Buffett Bet 2.0

The fund tracks ten major cryptocurrencies, such as Bitcoin, Ethereum, and Litecoin, although the bulk (78%) is Bitcoin. Morgan Creek is so sure of their success, that the partners are putting up the stake themselves.

The wager has been dubbed ‘Buffett Bet 2.0’, after a similar bet made by Warren Buffett, that the S&P500 would outperform a selection of hedge funds over a ten year period. Buffett won that bet, collecting his prize just last year.

Morgan Creek partner, Anthony Pompliano, says the plan is to donate the proceeds to charity, win or lose.

Cold Winter

The bet comes at an interesting time, as Bitcoin (BTC) 00 and other cryptocurrencies are enduring a prolonged crypto-winter. However, US stocks have also fallen recently, due to a number of concerns over global outlook.

Pompliano explained that the company was not just being bullish on crypto, but that its competition was also not exactly at an all-time high.

This is a combination of our outlook not only for the upside of cryptocurrencies but also the outlook on public equities.

Bad Form

Morgan Creek had better cling to the mantra of ‘past performance is not indicative of future results,’ however. The last big bet on Bitcoin is just weeks away from losing.

A call option costing $1 million was placed on a bitcoin price of $50,000 at the end of last year. Following a year which saw the price move from $1000 to $20,000, that may have seemed like a safe bet. However, for the contract to be worth anything now, Bitcoin must see an increase of almost the same magnitude in just three weeks.

Let’s hope that Morgan Creek Digital has stocked up on rabbit’s feet, horseshoes, and four-leaved clovers.

Earlier this year, an Australian investor tried to make a $6.3 million bet with Berkshire Hathaway, that Bitcoin would top its share price by 2023. It’s not thought that the famously crypto-skeptic company took him up on the offer.

Who will win the bet? Share your prediction below!


 Images courtesy of Shutterstock

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Lis 26

Bitcoin ETF ‘Definitely Possible,’ SEC Commissioner Confirms

SEC commissioner, Hester Peirce, recently appeared on the ‘What Bitcoin Did’ podcast, confirming that a Bitcoin ETF was definitely possible.


‘I Dissent’

The most notably pro-bitcoin SEC commissioner, Hester Peirce, appeared on the ‘What Bitcoin Did’ podcast at the weekend. Whilst unwilling to describe a future Bitcoin ETF as inevitable, she did confirm it was definitely possible.

Peirce first won the hearts of the crypto-community with her ‘statement of dissent’, following yet another denied Winklevoss ETF application. In the statement made in July, she publicly disagreed with the Commission’s view, that Bitcoin was not “ripe enough, respectable enough, or regulated enough to be worthy of our markets.”

She felt that the SEC had gone beyond its jurisdiction, in assessing the underlying asset, rather than the specific market that it would trade in.

In the podcast she reasserts that the SEC has a specific mandate, to uphold the regulatory framework. She believes that the SEC should allow for innovation within that framework and not become interventionist.

‘Crypto’ Not A Free Pass

Peirce explains that the SEC has brought in specialists to advise in the area of cryptocurrency, who have led the agency to take to a cautious approach. She believes that it is right to pursue those who use “crypto” in an attempt to scam people out of money but is pushing to allow more scope for innovation.

Just because you are calling something Crypto does not mean you can ignore the rules we have had in place for years… but I do think we also need to be willing to open the doors a little bit wider for innovation.

She stresses that although so far all cryptocurrency ETF applications have been rejected, they are still open.

Ongoing Relationship

Peirce points out that the commissioners have been inviting comments from the public, and that this process is extremely useful. The applications are an ongoing relationship or conversation, the SEC’s orders following denial simply point out issues to address.

One the face of it, it may seem like the SEC is poking around and trying to cause issues but in reality, it might be the opposite.

Peirce explains that many comments enquire about the timing of the route to final approval, but this is not so easy to answer. Each proposal is assessed on its own merits, and each is designed differently. So when a particular proposal will convince three of the five commissioners is hard to say.

Peirce suggests it must run its course.

Meanwhile, this month Switzerland approved the first Bitcoin ETP to trade on the Six Stock Exchange. This is the main stock exchange in Switzerland and the fourth largest in Europe. So it seems the winds of change are blowing and it can only be a matter of time before they reach across the Atlantic.

Will the Bitcoin ETF be approved by the final deadline in February? Let us know below!


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Lis 18

Switzerland Approves First Bitcoin-Cryptocurrency ETF with Ticker $HODL

The Bitcoin ETF $HODL, offered by Amun Crypto, will begin trading on Switzerland’s Six Swiss Exchange beginning next week. The ETF’s earnings will be linked to five different cryptocurrencies.


The ETF is being offered by Amun Crypto, a U.K. based fintech company. It will begin trading on Six Swiss Exchange next week. Six is Switzerland’s chief stock exchange, as well as the fourth largest in Europe.

According to the Financial Times, the ETF “[…] has been designed to track an index based on the movements of five leading cryptocurrencies.”

Roughly half (48%) of the ETF’s assets will be invested in Bitcoin (BTC) 00. The rest will be put towards bitcoin cash, XRP (30%), ethereum, and litecoin.

New Kid On the Block

Financial Times‘ writer Matt Flood notes that the ETF has been crafted in close accordance with the standards expected from traditional exchange-traded funds. This is according Hany Rashwan, Amun’s top executive.

Rashwan describes the aims of the ETF:

The Amun ETP will give institutional investors that are restricted to investing only in securities or do not want to set up custody for digital assets exposure to cryptocurrencies. It will also provide access for retail investors that currently have no access to crypto exchanges due to local regulatory impediments

The Times reports that while competitors like CoinShares and Grayscale exist, they differ in legal form, whilst only being linked to one cryptocurrency. Seeding for the ETF will be fostered by Jane Street and Flow Traders, and it will trade using the ticker $HODL.

The Financial Times highlights the ETF’s arrival amid the lowest drop in BTC price 00 in over a year. The ETF is has been particularly the source of much hype in the cryptocurrency space. An exchange-traded fund product is expected to facilitate institutional buying of bitcoin.

Switzerland seems to be perpetually fixed in the crypto news cycle whether its happenings in Crypto Valley or the present ETF. Progress seems to abound.

In October, Bitcoinist reported on Crypto AG’s recently-granted cryptocurrency asset management license. A month earlier, Bitcoinist also wrote on Switzerland’s status as a top global Bitcoin destination.

What are your thoughts on the Bitcoin ETF $HODL? Share your thoughts below!


Images and media courtesy of Shutterstock, Twitter (@boscryptocnn, @MANT121266), YouTube (ThinkCrypto).

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Lis 16

Ron Paul Survey: Half Would Choose Bitcoin For 10 Year Investment

Most people would choose to invest in Bitcoin over gold, fiat currency, and bonds, according to a survey by Ron Paul which continues on Twitter November 16.


Bitcoin Is Best Future-proof Investment

The former US lawmaker and presidential candidate, well known for his advocacy of the cryptocurrency, has so far yielded responses from over 58,000 people. Almost half of them would want to invest in Bitcoin.

Traditionally much larger than in-person surveys, such as those recently conducted in the UK and Russia which also showed strong popularity for Bitcoin, Twitter polls nonetheless cater to social media’s active cryptocurrency community.

Paul added the proviso that an investment must remain untouched until 2028, suggesting faith among respondents over Bitcoin’s longer-term future has not deflated with this year’s prices.

The survey reads:

A wealthy person gifts you $10,000. You get to choose in which form you’ll accept the gift. But there’s a catch: You must keep the gift in the form that you choose for 10 years without touching it. In which form would you accept the gift?

Bitcoin Criticism Backfires

At press time, 49 percent of 58,131 had voted for Bitcoin 00, followed by 39 percent for gold. Just 2 percent would choose cash US dollars.

Paul’s timing provides a sharp contrast with the cryptocurrency naysayers who continue to pour cold water on the market’s chances in the midst of this week’s fresh price downturn.

A speech by the European Central Bank board member Benoît Cœuré Thursday described Bitcoin as an “extremely clever idea” but added that “sadly, not every clever idea is a good idea.”

In an ironic twist, a Bitcoin analyst’s rebuttal on Twitter garnered more support in the form of likes than the original comment.

At the same time, economist Nouriel Roubini capitalized on BTC/USD’s fall below $5,500, reiterating his belief the pair “belongs” at “zero.”

What do you think about Ron Paul’s Bitcoin survey? Let us know in the comments below!


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Říj 28

Fidelity Won’t Build Its Own Exchange, Focused on Bitcoin Custody, Exec Confirms

Tom Jessop, President of Fidelity Digital Asset Services says that the asset manager will take crypto to the next level by enhancing the sector and providing a secure Bitcoin custody solution so institutional investors can get a piece of the crypto pie.


Bitcoin Custody Solution Will Remove Barrier

In the most recent episode of her Unconfirmed podcast, Laura Shin interviewed Fidelity president of Digital Asset Services Tom Jessop. The two had a cryptocurrency and blockchain focused discussion about the company’s plans to help develop the Bitcoin 00 and cryptocurrency market to a higher level of functionality and value.

When asked whether or not Fidelity would build its own cryptocurrency exchange, Jessop explained that he believed that the current exchanges do a fairly good job at this and Fidelity is more focused on providing custody services for institutions looking to become involved in cryptocurrency.  

Jessop also explained that a current barrier to cryptocurrency has been service providers that require pre-funded accounts and Fidelity intends to remedy this problem by building a more traditional investment platform, which allows users to execute trades on one or more exchanges at best price, then determine how to settle once completed.

Fidelity Foresees the Future of Crypto

Shin and Jessop them delved a bit deeper into the nuts and bolts of Fidelity custody solution and Jessop explained that at the moment there are plenty of investors with sizeable cryptocurrency positions that lack a custody solution and also find it tedious to carry out trades.

Fidelity intends to fill this niche by providing a cold storage solution and Jessop believes that the well-known fact that Fidelity manages more than $7 trillion in assets will provide the assurance of security that institutional investors require. According to Jessop, this is why Fidelity chooses to focus on custody rather than developing an exchange since “we know how to manage security at scale.”

Shin and Jessop closed the interview by forecasting future events in crypto and Jessop believe that retail and institutional interest in crypto is increasing as the market matures. He points out that hedge funds managers, family offices and emerging market analysts are all focused on creating new cryptocurrency products and instruments that will move the industry forward.

When asked what does 2019 hold, Jessop said the world can “expect more [influx] over this year and into ‘19, which will raise the bar for everyone and help accelerate growth in the market.”  

Do you think Fidelity’s Digital Assets Service will usher in the next cryptocurrency bull run? Share your thoughts in the comments below! 


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Říj 27

10 Years On: Five Things Needed for the Mass Adoption of Bitcoin

It’s been ten years since Satoshi Nakamoto published the Bitcoin White Paper and introduced cryptocurrencies to the world. His radical vision of a decentralized peer-to-peer electronic cash system was groundbreaking, as it sought to rebuild the structures that upheld our global financial institutions. A decade on, the cryptocurrencies market is now worth $209 billion globally, and there are more than a thousand separate tokens in circulation.


[Note: This is a guest op-ed article submitted by Samuel Leach, Founder of Yield Coin]

Despite this success, Nakamoto’s vision is yet to be fully realized. Although “cryptos” and associated phrases have entered the popular language, and awareness of them is at an all-time high, uptake has been restricted to a narrow subset of society.

Bloomberg estimates that around a thousand users own approximately 40 percent of all bitcoin currently in circulation and cryptos have failed to supplant fiat currency. Before we see the mass adoption of cryptocurrencies, there are a number of obstacles that first need to be overcome.

Regulation

While regulation is often treated as a pariah among many in the crypto community, if executed properly, it will bring beneficial change for all. Cryptocurrencies have only been in existence for a relatively short amount of time meaning many governments are still figuring out the best way to regulate them. The result of this has been a crypto market structured in a laissez-faire fashion. While it can be argued that this has fostered further innovation, it has undoubtedly led to several negative side effects.

At present, anyone could set-up a new cryptocurrency and raise significant capital without having to face repercussions if they fail to implement their plans. This has reduced overall confidence in the market, as it can be difficult to differentiate legitimate projects from nefarious ones. This is also preventing many institutional investors from entering the market, as the lack of regulatory guidelines will lead to compliance issues on their part.

Volatility

A daily price swing of 10-20 percent is not uncommon among most cryptos, making them exceptionally volatile in comparison to fiat currencies; in comparison, the pound lost 4 percent of its value against the dollar on the infamous Black Wednesday. Finding a way to temper this instability would go some way to certifying cryptos as legitimate currencies.

Bitcoin Price Volatility

At the moment, it would take a very brave consumer and equally brave merchant to conduct a transaction using cryptocurrencies. The inherent volatility of most cryptos means consumers run the risk of massively overpaying and similarly, the outlet risks the value of the crypto received being eroded.

Practicality, Usability & Accessibility

While cryptocurrencies have seen some mainstream usage among investors interested in day trading and investing, this uptake hasn’t been reflected by everyday consumers.  This is mostly due to crypto’s impracticality for day-to-day usage. Some of this is due to its price volatility but a more central factor is the lack of businesses who are willing to accept it as a form of payment. If individuals are unable to find a legitimate use case for their crypto, then its value as a form of electronic cash is zero. Further, the process of acquiring crypto itself is difficult, meaning uptake has been restricted to a tech-savvy subset of the overall population.

It should be noted, however, that while numerous solutions are in place allowing the spending of bitcoin via third-party services such as gift cardsBTMs, etc. — this often adds friction and introduces more middlemen into the experience.

BTCPay is a Better (and Cheaper) BitPay, Says Core Developer Nicolas Dorier cryptocurrencies

Security

In the beginning, cryptocurrency related crime was almost non-existent, but as the market has grown, it has attracted the attention of organized scammers and hackers. Earlier this year, criminals stole $530 million worth of crypto from the Coincheck exchange, and there have been many other examples of large-scale thefts.

With ‘traditional’ financial systems, when a payment is made, third parties ensure that the transaction goes through and if anything does go wrong, they are liable for recovering the funds. Similarly, if your credit or debit card information is stolen, then you aren’t responsible for any transactions made. With cryptos, however, it is the user’s responsibility to ensure that all the data associated with a transaction is correct. If a user’s private key is stolen, then crypto can be stolen with a low chance of recovery.

Understanding

Research has found that 38 percent of the British population do not ‘understand’ cryptocurrency. With the commonly held misconception that it is a tool for criminals to launder money being the most cited reason for mistrusting it. While those involved in the community understand the revolutionary possibilities of cryptos, the wider public still needs further education on the potential benefits.

For those not familiar with trading concepts, the notional value and artificial scarcity that underpins crypto may be hard to grasp.  Further, the existing way in which money has been exchanged for goods has been long established, and cryptocurrencies will require people to think about transactions in an entirely new way.

Without a doubt, the introduction of cryptos has been revolutionary. However, whether we are within the midst of a complete reconstitution of the financial system remains to be seen. If the engineers and developers involved with cryptos can find a way to deal with the intense volatility and lack of widespread understanding around cryptos, then their benefits will be able to be enjoyed by all.

Do you agree with these barriers to adoption? Are there more? Share your thoughts below!


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