Are the crypto currencies going mainstream? Are we there yet? How long before we get there?
Yes! It has been a while since the questions started and they have not been answered yet.
Here are my 2 cents.
The volatile Bitcoin has moved aggressively since November. It flexed down for a short period of time then later eclipsed its highest price in history. Is this a big deal? Is it a fluke? Or is it the breakthrough that firmly establishes the digital currencies as something here to stay?
I know what you are thinking... lots of unanswered questions.
Early concerns around the legitimacy of exchanges, new and unproven technology, lack of security and centralized oversight/controls, started to dissipate driven by people's strong desire for anything that can bring them instant wealth.
More money in people's pockets equals more willingness to take calculated risks in new arenas to satisfy the need for instant gratification. Large investors are not immune from the benefits of this fulfillment as there are many opportunities to get a crypto at low price and take profit quickly. It is also a lot easier to participate in an ICO than to take part in an IPO.
Anyone can take part during an ICO. It makes people want to be part of it.
Can we agree (maybe) that today Cryptocurrencies have real world value?
They are being accepted in more and more places. They can be used to make purchases, pay bills, buy a house (hello Paypal) and etc…
Cryptocurrencies, and the associated digital tools, eliminate the middlemen, allow users to exchange directly with secure and verifiable transactions.
Crypto returns continue to skyrocket, outperforming any other asset in this world, with unheard average returns of +1200%. If you purchased Cryptos last year, it would have outperformed any of your mutual funds or other investments.
But, as the Cryptocurrencies become the next big thing and go mainstream, there are a few obstacles that need to be removed. In order to become dominant it must:
To regulate or not to regulate? This is the dilemma.
We may not like regulation, but clear guidelines and regulation will help in the development of improved products and services making it secure for everyone.
This has been a long running debate. The purpose of decentralized Cryptos is to avoid regulations and oversight. On the other hand, as I had earlier mentioned, without controls in place, there are risks for the consumers.
So, what is coming?
Governments are starting to react. There are a few classifications. The cryptos are being declared illegal from the beginning or illegally distributed or belonging to a different asset class.
The US Treasury Department had a meeting with members of G7 to find a common ground without any success. Some countries (Germany included) are resisting to allow cryptos to exist within their economic zones while others are already Crypto friendly.
There is a proposed bill, called the Stable Act. This bill would make it illegal for anyone to issue or offer a stablecoin without approval from FED or FDIC. Are we smelling something here? It is clear that regulatory bodies across the world are still having a hard time to develop rules to regulate the crypto assets? Current laws are outdated for this new tech based economic system and the heads of regulatory systems have very little understanding of the benefits offered by crypto and other digital assets.
Let's take a quick look at the legal action against Ripple. The lawsuit filed by the SEC, and it’s former leader, is by far the largest attempt to attack the sale of a cryptocurrency to date. The SEC alleges that the sale of an unregistered security resulted in the issuance of XRP by Ripple. There are many voices arguing what constitutes a security without too many agreeing to what really does. The Department of Justice and the Department of Treasury classified XRP as a currency, while the SEC is not agreeing. So…. who sets the standard? Who sets the guidelines? Who provides direction? A modern digital economy can not be structured with hundred year old laws in an economic system created hundreds of years ago. It needs new up to date thinking.
I agree that if strict regulations are passed, it will have a negative impact on the industry, with many platforms shutting down or moving to friendly places (Bravo XR, just for thinking about it).
In my humble opinion….do not listen to the noise and get distracted.
The Crypto is here to stay. The digital economy has already started to replace the centuries old economics. We just have to be careful with our choices just like we are with every other investment vehicle. We are still in its infancy and only those who dare, may fly.
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