Cryptocurrencies have changed the landscape of the financial industry in a very short period. Even though they didn’t get much appreciation in the initial da… I think Compound could have some value because it enables stablecoins to pay interest. Notably, the Compound prototocol pays 1.52% interest on Tether (USDT) and 1.65% interest on USD Coin (USDC). Cryptocurrency is a digital currency that attempts to replace normal paper money. There are things you should know before starting trading cryptocurrencies. Cryptocurrencies may render some outdated regulations obsolete, according to crypto-anarchist and white hat hacker Pavol Luptak. According to Luptak, “cryptocurrencies or crypto markets may undermine government laws and regulations that are obsolete for the 21st digital century.” He said, “I can say the Space Age technology will help us to escape from the Bronze Age … Bitcoin and other crypto need to work with financial incumbents to fully realize their potential
Cryptocurrencies have changed the landscape of the financial industry in a very short period. Even though they didn’t get much appreciation in the initial days, today cryptocurrencies have gotten a wide acceptance. The numbers of cryptocurrencies are increasing day by day and it is expected that future transactions will be in cryptocurrencies.
As a result, most of the banks and traditional financial institutions are going to face a lot of problems. Because there is a threat to the traditional currencies due to the cryptocurrencies. But the banks and financial institutions are beneficial from the traditional currencies. In this article, I am going to share what are some reasons for which traditional financial institutions do not like crypto.
In 2018, the size of the crypto market exceeded the largest bank of the USA, JP Morgan Chase in terms of market capitalization. Only Bitcoin’s market capitalization exceeds the market capitalization of many Chinese banks. Again, Ethereum also exceeds the market capitalization of Morgan Stanley.
Due to this fact, financial institutions, as well as banks, are getting heavy pressure on their operation. The growth rate of the crypto market has become a threat to the banks. So banks do not like this and they are trying to decrease the growth rate.
Some banks also restricted their customers that they can’t purchase any cryptocurrency form credit cards. This is a step by many banks to decrease the rate of growth of the virtual currency market.
In 2017, the whole world got surprised by the increase in the value of bitcoin from $1000 to $20,000 which is unbelievable. Even though the value is fluctuating but the banks are facing a lot of problems with this movement. The value of cryptocurrencies is increasing because more people are investing in them. If you want to invest in cryptocurrencies then you can invest through bitcoin trader.
Recently, there is a fall in the value of bitcoin made some investors to panic. But some experts say that bitcoin is going to boom 100 times the present value. Although many bankers claimed that the bitcoin revolution was a fraud, they later realized the potential of blockchain technology.
With the increase in the value of the cryptocurrencies, banks are getting disrupted because people are attracted more towards the crypto market.
Another major reason why banks oppose cryptocurrencies is the decentralization nature of the underlying blockchain technology. That means you don’t need a third party like banks for verifying your transactions. This is what banks strongly oppose cryptocurrency because banks and financial institutions are the intermediaries whose job is to verify and approve transactions.
This has become a major problem for financial institutions. With the rapid growth in the field cryptocurrency may take away the power of banks over money. So banks and financial institutions get scared that blockchain technology may replace them. As a result, banks perceive the crypto market as their competitor so they do not like cryptocurrencies.
Money transfer in cryptocurrency requires very less time as compared to traditional currency for long-distance (especially cross border payments). In the long run, this might take away the control of the economy from the banks which is a disruption of the current banking system.
Many bankers also do not ready to accept the crypto market because of the underlying technology. As the new technology is a little complex, so many bankers find it difficult to understand. For that reason, they don’t like it and claim that it’s not good. They are unable to grasp the technology. Although some bankers understand the crypto market, how it works, still they do not like it.
Another main reason banker hates the crypto market is that they might lose their job. With the disruption of cryptocurrencies, many banks are getting many operational and functional troubles and this might shut down their business in the future. As a consequence, many bankers might lose their job in the future. So, they don’t like the crypto market.
Hopefully, you have understood why traditional financial institutions do not like cryptocurrencies. As mentioned above, the growth in size, values, the popularity of cryptocurrencies are some potential threats to the banks. Anyway, please mention what’s your take on this.
We hope you enjoyed this promoted piece as much as we did!
Author: Rahul Asthana
Can Compound (COMP) add Interest to Cryptocurrency?
Compound (COMP) is the most interesting cryptocurrency project I have seen in a while.
The idea behind Compound is simple to get cryptocurrency and stablecoins to pay interest. To achieve that goal, the Compound Protocol can add interest to any altcoin. For example, the Compound Protocol was earning 0.11% interest on $18.0836 million in Basic Attention Tokens (BAT) on 19 July, 2020.
Moreover, they claim the Compound protocol was earning 1.86% interest on $891,052,905 in Dai (DAI) stablecoins on the same day. Overall Compound claims its protocol was paying interest on $1.669 million worth of digital assets in nine markets.
The hope at Compound is to encourage ordinary people to buy cryptocurrency by paying interest. Developers add the protocol to existing cryptocurrencies such as Ethereum (ETH).
I think Compound could have some value because it enables stablecoins to pay interest. Notably, the Compound prototocol pays 1.52% interest on Tether (USDT) and 1.65% interest on USD Coin (USDC).
I think the ultimate goal at Compound is to create a blockchain product that functions like a bank account. For example, Compound could help stablecoins pay interest.
However, I think cryptocurrencies lack one of banks’ most attractive attributes. To elaborate governments insure bank accounts in many countries.
In the United States; for example, the Federal Deposit Insurance Corporation (FDIC) insures all checking, savings, and money market deposit accounts and certificates of deposit (CD) for amounts up to $250,000. I think FDIC insurance gives banks a market advantage in finance.
To explain, people put money in the bank because they know they will get it back. In contrast, you can lose everything you put into cryptocurrency or stablecoins. Hence, I think crypto cannot compete with banks as an investment.
I believe ordinary people will not put money into crypto until they think they will get it back. Therefore, I think cryptocurrency will be a rich person’s playtoy until it gets insured.
Thus, Compound and its competitors need to figure out how to insure cryptocurrency. Note: today’s stablecoins sort of solve this problem by linking stablecoins to fiat currency held in trust accounts at banks. They back the Gemini Dollar (GUSD) with funds held in a State Street (NYSE: STT) trust account.
In detail, a decentralized app (Dapp) in a stablecoin makes a payment in fiat currency from a bank account when you spend the stablecoin. Thus, the technology to create a stablecoin they link to a bank account exists. Yet you will need a stablecoin that releases payment from a checking or a savings account.
However, most cryptocurrencies do not pay interest. Hence I think the killer app for stableoins will be an insured product that pays interest. I think this killer will be a cryptocurrency or a stablecoin with some of the attributes of a bank account.
Hence, Compound has one part of that killer app: it pays interest. However, Compound has not solved the insurance part.
Mr. Market thinks Compound (COMP) has some value. For instance, CoinMarketCap estimates Compound had a Market Capitalization of $407.206 million and a 24-Hour Market Volume of $31.574 million on 21 July 2020.
Consequently, CoinMarketCap gave Compound a $158.99 Coin Price on 21 July 2020. That made Compound CoinMarektCap’s 31st most popular cryptocurrency on 21 July 2020.
They based those prices on a Circulating Supply of 2.561 million COMP and a Total Supply of 10 million COMP.
Given these numbers I think Compound (COMP) is worth investigating. I like Compound because it solves a real problem and tries to make cryptocurrency better for ordinary people. However, Compound is still a speculative cryptocurrency. Yet it could have some of the tools necessary to create a cryptocurrency Killer App.
If you want cryptocurrencies that solve real world problems, Compound is worth investigating.
Originally published at https://marketmadhouse.com on July 21, 2020.
Author: Daniel Jennings
What You Need To Know Before Trading Cryptocurrencies
There are a few things that you should know before starting cryptocurrency trading. The development of cryptocurrencies has developed a novel way of trading and conducting business. Digitalization led to the development of digital currency, such as bitcoin.
Many people would love to trade with cryptocurrency, however, most of them do not understand the basics. There are several things that you should get acquainted with before you begin trading.
Cryptocurrency is a digital currency that attempts to replace normal paper money. The digital money is not regulated by any bank or government. Consequently, most of the policies that apply to traditional banks don’t apply to bitcoin. Many find it easy to trade with cryptocurrencies as a result of the unique background.
You acquire cryptocurrency through a process known as mining, or you can buy it from a person or organization that has already mined it. Cryptocurrency employs the use of supercomputers that develop mathematical problems and are paid in cryptocurrency as a result. Mining heavily depends on sophisticated software that uses a lot of energy.
Trading in cryptocurrency such as bitcoin requires a trading account from a reputable and accredited company. Many companies trade in the digital market exchange. As a newbie to trading, you might find it difficult to select the best company to open an account with. You can check out Bitcoin Rejoin if you wish to open a trading account. Many companies registered in the digital market exchange require you to verify your identity for you to enjoy all benefits such a withdrawing to fiat.
A digital wallet works similar to a normal wallet. You can opt to store long-term savings in your non-custodial wallet. You can also use a digital wallet to store amounts that you wish to use in trading or convert to fiat currency. Furthermore, you also deposit cryptocurrency into the wallet when trading.
Private keys show ownership of cryptocurrency. Lack of private keys to specific cryptocurrencies withdraws any claim to the money. Consequently, you should securely guard your account as well as your private keys. Hackers target wallets and private keys to rob you. The best way to increase security for your trading account is by using two-factor authentication. Hackers find it difficult to get past this security since it is usually dependent on your personal information.
Research is crucial if you wish to be successful in cryptocurrency trading. Trading does not depend on luck. You have to sacrifice some time to learn about cryptocurrency, the market, and trends. The information helps you make decisions when trading on your online platform. You also have to learn how to interpret charts and indicators since they play a fundamental role in influencing decision-making during trading.
Cryptocurrency trading requires patience for you to become adept in the digital market exchange. You have to trade several times for you to understand the basics and also enjoy trading. Like other forms of trading, cryptocurrency has risks. However, big risks translate to huge returns. You have to be willing to grow your trading account gradually. Many people who start crypto trading anticipate huge profits on their first trial. Unfortunately, some of the individuals quickly quit when they make losses on their first investment. Cryptocurrency is extremely volatile; hence, you have to be patient and willing to make losses before you start making gains.
Overall, cryptocurrency trading is extremely profitable, and anyone can make a fortune. The above information makes it easy for you to make decisions before you begin trading. Newbies should understand the basics of cryptocurrency before they start trading. You should also maintain high privacy and security for your digital currency. Otherwise, hackers can easily take advantage of your naivety to make a profit.
Young Upstarts is a business and technology blog that champions new ideas, innovation and entrepreneurship. It focuses on highlighting young people and small businesses, celebrating their vision and role in changing the world with their ideas, products and services.
Cryptocurrencies Could Undermine Obsolete Laws, Says Cybersecurity Expert
Cryptocurrencies may render some outdated regulations obsolete, according to crypto-anarchist and white hat hacker Pavol Luptak.
According to Luptak, “cryptocurrencies or crypto markets may undermine government laws and regulations that are obsolete for the 21st digital century.”
He said, “I can say the Space Age technology will help us to escape from the Bronze Age rulership. Despite the fact that rulers will not like it.”
“Although we spend a significant part of our lives in an unlimited borderless virtual online world, we are still trying to enforce the territorial laws valid for the physical world. I don’t think it makes sense from a longer perspective,” he stated.
Luptak also explained that nowadays anyone can create an anonymous offshore firm in any jurisdiction and use anonymous crypto assets instead of bank accounts, so traditional banking regulations are no longer enforceable.
Because of this, he believes that “cryptocurrencies will provide a new haven” and “we can expect massive tax optimizations” as a result of the new fiscal competition. In fact, he believes that taxation itself is in danger:
“When a lot of people or companies start to use truly anonymous cryptocurrencies, enforcement of taxation will also be challenging, maybe even impossible.”
Luptak noted that when people use decentralized versions of services like Uber or Airbnb with anonymous cryptocurrency transactions, enforcing the same regulations that are applied to their centralized counterparts may be impossible.
Generally, he expects that a universal sharing economy mobile application bypassing government control or taxation will also take off in the future. Such solutions couldn’t be taken down by authorities:
“It can be a fully decentralized solution impossible to shut down by the government with the use of anonymous cryptocurrencies, decentralized applications, or even backed by decentralized legal subjects.”
Because of those censorship-resistant services, Luptak believes that states can lose their business license monopoly.
Luptak even claims that decentralized dispute resolution solutions are capable of replacing a significant portion of the functions traditionally performed by governments. Laws concerning data management like the right to be forgotten guaranteed by the European Union’s General Data Protection Regulation cannot be applied to blockchain technology.
With the reduced ability for governments to spy on and censor communications, Luptak also expects that services like “anti-government insurance against victimless crimes” or “anonymous, decentralized crowdfunded whistleblowing” to be born, with far-reaching consequences:
“[Those technologies] can mean a total decomposition of all government secret agencies and government ‘classified’ agencies.”
Luptak admits that he does not know whether such extreme decentralization will result in a positive or negative change, and says that it will probably be a combination of both. Still, he is convinced that — as with most technologies — the consequences of decentralization will depend of the needs of who uses the new tools:
“I believe the future will reflect our needs satisfied with future technology. They may be, of course, perverse, creating new threats. But this is happening all the time during any technological evolution.”
Bitcoin Created The Future Of Money, But Needs To Work With Incumbents Like PayPal
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Much has been made written and spoken about the recent foray by PayPal and others into the cryptocurrency space, but that is just the tip of the iceberg in terms of blockchain and cryptoasset development. Adding 300 million customers who will be able to transact with crypto, and do so on a peer-to-peer basis, is good news for the ecosystem at large. Such developments might seem antithetical to the original idea and concept of bitcoin, but are key to the continued expansion and development of cryptoassets.
Bitcoin was an ideal, and while that ideal has not exactly worked out as planned, there are several developments that continue to accelerate blockchain and crypto adoption. Intermediaries and third parties might have been the players that crypto was designed to disrupt, but in order to actually get cryptocurrencies to be used as legitimate fiat alternatives there does seem to be a need for these intermediaries to be involved. Stablecoins and CBDC’s are simply symptoms of a much broader trend toward more semi-centralized and centralized blockchain and cryptoasset options.
Let’s take a look at just why the blockchain and crypto space needs, and will benefit from, the involvement of third parties and intermediaries.
Stability. Engaging third parties will help encourage broader usage of cryptocurrencies as fiat alternatives, and not just as investment options. Price stability has long been an issue for truly decentralized cryptocurrencies, but by involving some of the major payment processors, price volatility will hopefully become less of an issue. By working with, as opposed to against, incumbent financial institutions and third parties, cryptoassets will gain greater stability and greater utilization.
Prices for specific crypto can be higher or lower than others, but having the backing and infrastructure of well known payment processors can help reduce some of the more stomach churning price volatility.
Functionality. Crypto was designed to be a legitimate alternative to current fiat currencies, but in order for that to actually come to fruition these options need to be as convenient and as simple to use as current options. Linking in third parties, payment processors, banking institutions, or some other sort of institution will help make this possible. In the aftermath of the bitcoin price bubble of 2017, multiple peer-to-peer services and platforms have emerged, so in order to achieve mainstream adoption, crypto options will need to be as customer friendly as these current tools.
Venmo, Zelle, and Cash App should be leveraged to help make conducting crypto transactions, including being able to reverse or edit crypto transactions. Mistakes happen, and consumers need the confidence to ensure they can undo these mistakes.
Regulatory clarity. The rise of stablecoins, asset backed coins, or other forms of central bank digital currencies might strike many as the antithesis of the idea of cryptocurrency. As appealing a slogan as that might be, that is only a partial view of the situation; to get cryptocurrencies and blockchain at large to go mainstream, there is going to be a need for increased regulatory clarity. By working with established payment processors and financial institutions, all of whom already have experience dealing with the numerous compliance and regulatory rules, the pace at which crypto regulations are resolved will only accelerate.
Depending on which counterparty, individual, or institution is asked, the bringing together of blockchain and crypto organizations with established incumbents can be seen as good or bad news. Bucketing these developments into one single category, however, represents an incomplete view of the marketplace as well as one that will hamper the continued growth of the ecosystem.
Cryptocurrencies and digital money at large are the future of money, that much is clear, but in order for cryptocurrencies to fully generate and create the promised benefits it is increasingly clear that incumbent institutions must be brought into the conversation. Regulatory experience, price stability, and the increased clarity with which crypto can be treated and reported are simply a few of the benefits that can be derived from such an arrangement.
Blockchain and crypto are the future, and in order for that future to play out as promised, there needs to be partnership between crypto and incumbent financial institutions. This collaboration should be celebrated, encouraged, and accelerated if crypto ever hopes to achieve the widespread utilization that much of this promise is based on.
Author: Sean Stein Smith