Think of 1850, a landmark year in the gold mining industry where seemingly gold appeared out of nowhere in California, Alaska, Oregon, and other parts of the United States and changed the course of history. A revolution of transaction and trades was starting from that moment as gold was gaining a reputation and trust to be traded as a precious metal. Some were trading rocks, metals, minerals and then some guy named Levi Strauss decided to build an industry of pants with its premium stores installed all over the country. The entire ‘sense’ with which money was understood by the common man was reshaping its design and a new medium of trade, a new store of value, yet illiquid was circulating within the United States called as a commodity. Gold today is highly liquid, but still it takes nearly 24 hours to get them completely cleared and transacted on an exchange. And then 2008 happened. The worst Financial crisis consecutively also gave birth to a new phenomena in the financial ecosystem called as BITCOIN.
Over the past decade, Bitcoin started gaining popularity which many consider as the first blockchain and cryptocurrency. It started from pennies and is currently trading near $8000. What decides the value of these commodities? It’s the people like us who are willing to buy gold or Bitcoin at their price. However, the intention of development of Bitcoin still stands as a means of wealth transfer. But the market still envisions a world where could turn up to an online store, physical store, or a realtor and exchange a Bitcoin in return of silver or gold or something that was physically tangible that you could see touch, smell, feel, etc. These two commodities are extremely different in terms of liquidity. Currently, Bitcoin can be exchanged for other cryptocurrencies and this is where traders strategize to earn more Bitcoins by taking advantage of the volatility of other altcoins. The correlation between Bitcoin and other altcoins and the behaviour of traders with respect to this is a critical subject of research at CoinGenius.
It’s a conscious decision of traders that when Bitcoin increases in US dollar value, then they should sell the other altcoins. In this past year, every crypto project is undergoing deleveraging except Bitcoin. Majority of alts in prices are down when Bitcoin loses its value. Every project aims to establish itself as an organization with its own cryptocurrency like Ethereum and Ripple. Imagine going to your daily shopping or weekly shopping routines and you needed a groceries store coin then you need a dry cleaning coin, etc. All of a sudden your pockets will be full with all these different coins. The key for these projects is to find a use case but on the contrary, Bitcoin doesn’t have a use case. It’s use lies in its liquidity pool and the network. It has the most name recognition being the oldest and the largest crypto by market cap.
Source — Cointelegraph
Last week, Germany passed a law that allowed German banks to sell to store and sell crypto currencies beginning in January. Now, the question is what does this mean for cryptocurrency adoption? This brings crypto custodian services to the limelight. What are the standard operating procedures for being a cryptocurrency custodian? We ask this because how do regulators issue licenses without a clear definition of best practices for fraud, theft and loss? Adding to this, we have traditional banks of compliance and expertise, but will we have cryptocurrency expertise as an additional skillset to learn for the banks. How will exchanges like Binance, Coinbase, or Kraken cope up with this growing competition of banks becoming a storage and transacting hubspot. How are the traditional services like FX trading will be affected? Also, if Germany goes to implement this, the rest will follow as Germany which is the largest economic power in the EU. Switzerland, although not a part of EU can also consider following Germany’s footsteps, followed by other crypto friendly nations like Singapore and UAE.
Malta is like the greatest place on Earth. Even though it is incredibly difficult for Apple open up a banking account for cryptocurrency related enterprises, Germany’s position is they’re going to treat cryptocurrencies, like any other digital asset. So they’re going to enable their competitors by adding them to their bottom line adding them to their, you know, bucket of offerings for their consumer and retail customers, which does help cryptocurrency adoption. But it also just turns Cryptos into FX trading. The real value of crypto currencies won’t be as money, the real value of blockchain based assets will be tokenized equity and debt that is traded as easily as crypto currencies. And this is where we actually get to the part when we’re talking about STOs and ICOs, The real winners in this ecosystem are the new middleman of cryptocurrencies — the exchanges or similar service providers that enable retail investors and traders to actually do trading and investing.
Coming back to Bitcoin, people treat it as a deflationary currency, no one’s using it, It has a horrible user interface. It’s not very customer friendly. Therefore, you don’t have any customer service. There’s no help desk. We talked about scaling. Humans are humans and they need help desk. And so how that how is that going to Impact Bitcoin. However, another notable thing is Bitcoin never didn’t exist the last recession. So there was never an option. Adding to this, Social media existed but not like it does today. So the next recession will be a very social recession, meaning everyone’s got a video camera, they can tell their own stories through Instagram, Twitter, ticktock etc. Now, it contains the power to create the pervasiveness in our psyche and shrinking the global market sentiment of Confidence. Basically, overnight, when the social media narrative starts to become on recession, we’re doomed. It’s going to be very interesting to see, as people start to as that, as that foot, then sets in for just the economy as a whole. There will be people who will jump to Bitcoin as mentioned earlier, people didn’t have this option before.
Ethereum became money because a segment of the industry started using Ether as a means of raising capital. A series of companies were lined up which followed the trend and it collectively formed a huge liquidity pool. It got added to Coinbase. Now, the problem with that run up in smart contracts and those entities in the blockchain asset class that not everyone accepts ETH. People were raising funds for suppose Coin ABC which collected a huge chunk but were needed to be sold for fiats because that’s tangible in the current markets. There were no beds. So you had a run up from $12 to 1400. And the next year’s decrease from 1400 to I believe it was $71. Why? Because people were still needed to get cash out. And many of the ICOs had huge budgets and huge staff and they needed to be paid in dollars or pounds. ICOs are basic crowdfunding mechanism which means to solicit funds from the strangers. It is similar to the campaigns on Kickstarter or IndieGogo but doing it on Blockchain brings its own differences. Here, one can even make their own cryptocurrency and distribute them in return of the funds. The value of these tokens will decide how much an investor has made once the tokens are listed on an exchange. Hardly 10% of the future of token’s value is decided by the company and rest by the network and traders.
It is not just with the new tokens with comparatively sleek trading volume, but with Bitcoin as well. how Bitcoin and some of these things react to global markets and potential collapse of those economies. This week one morning, 56,000 Bitcoins moved from an unknown wallet to an unknown wallet, the price moved from 7000 to roughly 7600 and now back to 7400 in a matter of minutes. So we’re seeing some very strong movement from wallets which is over $400 million in USD terms. Some massive whales moving assets across the blockchain immediately impacting the price in some way. These are some of the factors which CoinGenius aims to understand and ascertain and give early warning signs of fluctuations and volatility to our that are yet to come. We have also seen the prices of Bitcoin getting affected in the cases of Greece and Argentina where the economies are performing way below par. Hence, it brings us back to our previous point that larger countries with larger economies, are going to ‘bestow’ an even larger impact on that reaction with price at the time of Economic Crisis. However, another prominent aspect of Blockchain which needs to be addressed here is that compared to the capital markets, we have the transparency and immutability with the distributed ledger systems which can honestly show what activities are happening in the markets.