Cryptocurrency has become the hot topic of discussion in both the offline as well as the digital world. It is deemed as one of the “greatest technological breakthroughs since the Internet” and rightly so because people have become rich overnight by investing in it. Let’s see about the evolving cryptocurrency market.
While investing in crypto might sound like an easy-peasy way to net a significant income, you should make note that crypto has also been called a “black hole” into which a consumer’s money could just disappear.
Therefore, it is very important to research the latest market trends to ensure that you do not lose your hard-earned money foolishly. Read along to understand the evolving cryptocurrency market and what it means for investors.
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What is Cryptocurrency?
In simple words, cryptocurrency is a medium of exchange or a digital currency that can be used to purchase goods or services electronically. It gets its name from public-key cryptography technology that ensures the communication is secure from third parties.
Similar to the US Dollar, cryptocurrencies do not have any intrinsic value i.e you can not redeem it for another commodity, such as gold. It is different from other currencies in that it has no physical form, is not legal tender, and is not currently backed by any government or legal entity.
The supply of crypto is completely decentralized and not determined by any central bank. The users of the system perform all the transactions. Therefore, there is a certain degree of risk associated with trading in crypto and hence you must do thorough research on the crypto exchanges before investing.
To ensure you a safe experience, we have curated detailed comparisons on Best Crypto Exchange Australia that you can start with.
The Evolving Cryptocurrency Market
The latest market trend vouch for the fact that cryptocurrency is here to stay. The question is not if crypto will survive, but rather how it will evolve to capture a bigger share in the market. As suggested by experts, the pace of crypto evolution will be highly influenced by the 5 key participants.
Let us understand how these participants will impact the evolution of cryptocurrency
The 5 Market Participants of Crypto
The 5 key participants that play a crucial role in its evolution toward mainstream acceptance and stable expansion are:
1.Consumer and Merchants
Cryptocurrency offers an easier and cheaper medium to customers and merchants for payment as compared to the traditional money services businesses. This is one of the key reasons why consumers and merchants re switching to crypto.
However, price volatility and the opportunity for speculative investments is still a major roadblock to its popularity. Consumers are likely to accept it on a broader scale only when they are promised an improved availability, reliable cash exchange, and an affordable level of effective consumer protection.
As crypto is already working towards offering innovative services that are not otherwise
available through traditional payment systems, it is likely to get better response in future.
More and more tech developers are joining the crypto bandwagon in the quest to design a user-friendly solution to consumer transactions. Majority of the tech developers are working on entrepreneurial pursuits such as developing exchanges, wallet services and alternative cryptocurrencies.
With its growing popularity, it is noe attracting experienced and enthusiastic techies that are likely to take the industry to the next level. The industry is in the process of hiring experts to develop cybersecurity technology and protocols.
The growing popularity clubbed with the ‘inherent value’ of the cryptocurrencies has attracted many investors in a short span of time. To date, the crypto market has been driven considerably by the venture capitalists who are very optimistic about the increase in consumer demand.
However, the highly volatile nature of crypto along with the complex regulations call for it applicable regulations.
4. Financial Institutions
The advent of internet banking has changed the horizons of financial transactions considerably. It had led to an increased consumer usage of alternative payment methods like Amazon gift cards, Apple Pay, Google Wallet, and PayPal.
However, all these mode of payments still need traditional financial institutions to process transactions. The fact that sets crypto apart from these alternative payment methods is that it has limit the role of
traditional financial institutions in clearing and settling payments.
Therefore, it is safe to say that the more that cryptocurrency gains acceptance among merchants and consumers, the less there will be a need for traditional financial institutions to provide clearing and settlement services.
Cryptocurrency, like other mode of payments is subject to Government Regulations. The attitude of various Governments are different and inconsistent around the world when it comes to the classification, treatment and legality of cryptocurrency. Regulations are also evolving at different paces in different regions.
However, in the near future, it is expected to be relaxed in favour of cryptocurrency.
Hence, we see that the crypto market is still in its infancy but is constantly growing to make a significant space in the international market. It has the potential to take over the conventional market strategies, longstanding business practices, and established regulatory perspectives.
It offers a medium to the consumers through which they have the access to a global payment system that is convenient, safe, and low-cost. It gives them an opportunity for consumers to use, store, and transmit money over the Internet easily.
The growth of cryptocurrency has been solid but not spectacular, as it has started from a low base. It is still facing challenges with so many of its characteristics falling between a currency, a financial asset, and a technology protocol, the pace of growth and adoption may splinter the industry.