The cryptocurrency market has seen tremendous growth over the past few years bringing a huge number of new investors to the crypto universe. Currently, the market cap has reached over $250 billion. The growth has come at the expense of the industry. While the growth has been huge, there are a number of challenges that have yet to be resolved.
2018 was a huge year for the cryptocurrency industry. Despite many obstacles, the cryptocurrency market capitalization topped $400 billion in December 2018. However, the world of cryptocurrency is constantly evolving and new challenges arise for the industry every year.
Bitcoin is facing major challenges in 2019. The problems are related to scalability, regulation and, of course, underlined by the current bear market.. Read more about why has cryptocurrency dropped and let us know what you think.While cryptocurrencies are no longer shunned by investors, the general public still doesn’t fully trust them to replace credit cards and cash. If cryptocurrencies are to win the support of ordinary people, there are four major challenges to overcome.
1. Volatility and liquidity
While bitcoin continues to rise in value, just like other types of cryptocurrencies, this isn’t necessarily good news for everyone. Rising prices are good for investors, but for cryptocurrencies to gain widespread adoption, stability is needed. Stability will allow cryptocurrencies to become a reliable store of value. On the other hand, the rapid rise and fall of the price will jeopardize the ability of cryptocurrencies to be widely used. While bitcoin seems to be becoming less volatile as it matures, the same cannot be said for all cryptocurrencies. The huge number of existing, disappearing and new types of cryptocurrencies also has implications for the overall stability of cryptocurrencies. Regulation is therefore necessary to control the volatility of the category as a whole. But not everyone sees regulation as a viable solution. Many point out that there are many benefits to deregulating cryptocurrencies. This is particularly true when it comes to providing access to money for those who do not have a bank. It also allows many merchants to enter the global market without having to deal with traditional banks and credit card companies. However, it is becoming increasingly clear that allowing completely unregulated cryptocurrencies will hinder cryptocurrencies from achieving stability. In the absence of a centralized authority, many factors can cause the price of cryptocurrencies to change in an instant. A balanced and well thought-out plan is needed to combine the benefits of stability and deregulation. The volatility of a crypto currency also affects its ability to be liquid. Therefore, it is difficult to use it as a medium of exchange in its current form. Although cryptocurrencies can be converted to fiat currency through third-party cryptocurrency exchanges, leaving your money on third-party exchanges can make it vulnerable to theft. Some companies try to get around this problem. On some platforms, buyers can spend cryptocurrencies on a product or service and the seller can accept payment directly in the fiat currency of their choice. There are even some extreme cases where cryptocurrencies have completely replaced fiat currencies in countries with particularly unstable currencies. These case studies and examples demonstrate the future potential of stable cryptocurrencies.
2. Public education
Lack of education about cryptocurrencies is one of the main barriers to their use by the public. As people accustomed to technology, especially the younger generation, increasingly embrace the idea of crypto-currency, education about crypto-currency must reach people of all ages and technological backgrounds to achieve truly widespread acceptance.
3. Cooperation with regulators and speculators
Cryptocurrencies are also currently struggling with a negative public image. It is no secret that cryptocurrencies have been involved in money laundering and other forms of illegal activity in the past. So the idea of introducing cryptocurrencies to the general public was undesirable and unsafe. Some countries, like the United States, have taken steps to regulate cryptocurrencies, but not without resistance. Critics point out that regulations are changing too quickly, making cryptocurrencies even more volatile. Cryptocurrencies need to become robust, both in terms of pricing and regulation. Without knowing what to expect in terms of laws and regulations, it is difficult for the general public to trust cryptocurrencies. What complicates matters is the anonymity of the internet, which makes it easy for people with bad intentions to influence the price of cryptocurrencies. Unknown users could move large amounts of cryptocurrencies into private wallets, creating a supply shortage. Therefore, these cryptocurrencies, as they are called, can have a significant impact on the value of cryptocurrencies. Without regulation and oversight, it is difficult to stop these crypto currency kits. A related issue is speculative trading. Many see cryptocurrencies as a get-rich-quick scheme rather than a new form of currency. This created a bitcoin bubble that burst in 2017 and wiped out many people’s savings. This shows that the attitude towards cryptocurrencies needs to change: not as a way to make money quickly, but as a stable form of currency.
4. Technology and practicality
Using cryptocurrencies can be tricky, especially for those who are not very tech-savvy. Buying and selling with cryptocurrencies is not as simple as using a credit card or even traditional paper money. Before cryptocurrencies can become mainstream, they must be made user-friendly. The above problem also makes scalability problematic. For a crypto currency to be scalable, it must be compatible with all types of software. Currently, cryptocurrencies lack interoperability, meaning it is difficult to conduct quick and easy transactions on a global scale. To solve this problem, one of the first steps is to ensure the interoperability of blockchain technology.
The future of crypto-currencies
Cryptocurrencies are here to stay, no doubt about it, but they still have a long way to go before they become an accepted form of currency. While many companies are taking the first steps toward adopting cryptocurrencies, they face a number of challenges that they must overcome. It is expected that cryptocurrencies will become less volatile, increasing their ability to be liquid. Cryptocurrencies need more education and need to reach a wider audience. Regulatory and speculation issues need to be resolved, and crypto-currency technology needs to become globally usable. For cryptocurrencies to really take off, these problems need to be addressed.
Guest article by Ian Kane of Unbanked
Ian Kane is the co-founder of Unbanked, a global blockchain-based fintech platform. Kane has worked in the technology and digital media sector for over 10 years, with a strong focus on business development, sales and strategy. His diverse professional background allows him to bring unique insight and experience to every assignment he takes on. Read more → read
Gaining an advantage in the crypto asset market
As a paying member of Edge, you have access to a deeper understanding of cryptocurrencies and context in each article. Chain Analysis Price snapshots More context Join now for $19/month View all benefits Published in: Adoption, Guest article
Do you like what you see? Sign up for updates.
1) Not enough liquidity. 2) The fear of regulation. 3) Lack of awareness. 4) Lack of mainstream adoption. All of these challenges are real, but each is being addressed in a different way. The most important one is liquidity.. Read more about why is bitcoin crashing today and let us know what you think.
why has cryptocurrency droppedis xrp dead 2021will xrp lose lawsuitwhy is bitcoin crashing todayxrp price jumpwhat happens if ripple loses lawsuit,People also search for,Privacy settings,How Search works,why has cryptocurrency dropped,is xrp dead 2021,will xrp lose lawsuit,why is bitcoin crashing today,xrp price jump,what happens if ripple loses lawsuit,xrp risk,crypto finance magnates