In the financial markets, cryptocurrency is one of the most divisive instruments. Take a look at the comments section of any crypto article in the Financial Times to see how far opinions differ, ranging from those who think they’re the next internet to those who think they’re ponzi schemes.
Different people view cryptocurrency differently depending on whether they think of it as a means of exchange or as a technology. As Azeem Azhar pointed out on his latest Exponential View podcast, money crypto is what dominates the headlines – it’s all about asset price movements and volatility.
As we’ve repeatedly stated, such as in Bearbull’s post on Why bitcoin can’t be a currency back in February last year, cryptocurrency faces major problems when viewed in the context of a currency. Transactional problems have been created by bitcoin and other cryptocurrencies due to their volatility and slow processing times. That’s before you hit the regulatory hurdles, an example being China banning crypto transactions last year.
IC assistant editor, James Norrington, has emphasized that the technology side of crypto is interesting (‘Crypto: too big to ignore, but not too big to fail’, IC, December 21, 2021). There is a rush among the brightest young developers to learn how to build crypto applications. It seems a key innovation that this technology can deliver is the ability to build a software system that can be trusted without trusting any of the participants within it.
A platform must mature before it can be useful. This takes time. As a prime example of what can be built on the tech crypto terrain that previously was not possible, Azhar points to the Helium Blockchain. ‘Internet of Things’ (IOT) devices, such as GPS packages, sensor modules in farms, use this crypto-based low-power network. Helium makes it inexpensive to build a global data network by using blockchain-based incentives to encourage individual wifi hotspots to connect to the Helium network and provide service to IOT devices.
It seems likely that most of the current crypto offerings will collapse. The crypto market is extremely hyped, partly due to where we are in the cycle, so only invest what you can afford to lose. According to the cryptocurrency tracking website Coinopsy, over 60 percent of initial coin offerings (ICOs) are dead before their first birthday. The sector is also rife with scams and fraudulent ICOs.
According to the latest blockchain crime report released by data firm Chainalysis, scammers stole $14bn (£10.32bn) in cryptocurrency last year, and crypto-related crime is expected to rise 80% in 2020.
You won’t be reimbursed if you lose money with crypto marketing since it is unregulated. For the purpose of preventing money laundering, crypto firms must register with the Financial Conduct Authority (FCA). If you want to buy crypto, check the FCA register to see if the company through which you intend to buy it is listed.
The FCA lists 63 firms that are permitted to offer crypto services, according to The Sunday Times . Three of them, Coinbase, Binance and Gemini, serve private investors; Coinbase is the most popular exchange in the UK. The Financial Ombudsman Service (FOS) can investigate complaints, and the Financial Services Compensation Scheme (FSCS) can cover up to £85,000 of your money if your financial institution fails. Only a handful of crypto-related companies provide access to crypto – eToro, Revolut, Moneybrain and Archax. There are important differences between the protection and cryptocurrency assets – the latter are not covered.
Original article can be found at; https://www.investorschronicle.co.uk/news/2022/01/13/time-to-think-of-tech-crypto-not-money-crypto/
Author
Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
