For Cryptocurrencies, There are Lessons for Them to Take from Wall Street
Cryptocurrency has never ceased to diminish from its current level of popularity. In fact, it's one of the few markets that has continually grown as the years have gone on. According to Investing.com, there are more cryptocurrencies than ever before, with the global tally standing at, or beyond 2,000 unique cryptocurrency tokens.
For a long time, cryptocurrencies and the blockchain that stands behind them, have been regarded, by a wide audience, as being a disruptor of the old established way of doing things. This is something well earned by Cryptos, as they provide a truly profound new perspective on areas such as the finance industry, attracting a new wave of investors and non-conformists.
But while it does stand as a unique, disruptive example of a new age, the cryptocurrency world should avoid the temptation of expressing disdain towards the markets it intends to irrevocably disrupt. In fact, there are many lessons that cryptocurrencies can learn from them, specifically, from Wall Street.
One of the first lessons that cryptos can pick up on quite quickly is that where you approach old markets with a new take, it allows you to uncover features of the system that have either stopped working or finding faults that hold the sector back from its full potential. This is something that the finance industry haven't had the luxury of doing; whenever there's been a receding market, a crash or depression, the finance industry has had to learn the hard way, with no map to chart their future trajectory.
It's because of this that cryptocurrencies should never be dismissive of the financial world, there are a number of practices which it's adopted over the years that will do nothing but benefit cryptocurrencies in a major way. In this regard, it's disruption with a modest sum of wisdom that's required when going up against the old institutions.
Here are just some of the ways in which cryptocurrencies can learn from the financial sector, taking into consideration that hard-learned lessons and age-old wisdom of areas such as Wall Street, in order to create a truly revolutionized financial world.
To Bring in More Money – Unite
This lesson is one that can be directed towards the current status of cryptocurrency coin exchanges, which function more as a patchwork of marketplaces interspersed throughout the internet, with no clear unifying features, proving a problem for any user looking for transaction security and any regulatory body in trying to hold them accountable.
The solution? Unify. By doing so, the benefits become all the more distinct: reduced fees for users, reduced market volatility, including faster transactions between users regardless of the scale. These are the sorts of net positives that draw more consumers to the marketplace as opposed to pushing them away.
One of the additional features of this is that with a better, unified landscape, it increases the probability that more affluent investors will be drawn into the space, seeking to capitalize on a crypto investment, further empowered by seeing a more secure, united market.
By doing this, it would drastically reduce the time that it would take to bring the use of cryptocurrencies to the mainstream, showcasing the security and potential to the end user, encouraging them to take part in the cryptocurrency ecosystem in a more substantial way.
Another net positive? A unified market means the prospects for companies and new businesses looking to gain investment increases exponentially too. This also includes new Investments, venture funds, and small-scale developers, all of them seeing the increased chances of obtaining funding or finding new and unique startups to invest in.
What we find, in our current landscape, is that it's the general aversion to unifying, and lack of trust that is holding back the cryptocurrency world, preventing it from realizing its potential as a result.
More Money at Stake will Incentivize Improved Security
One thing that the financial system learned is that with regulation and centralization, the rate of corruption and laundering can be dramatically swiped down to a minimum. If there's one lesson that the Cryptocurrency market would do well to learn, it's that corruption can happen to any industry, regardless of how it's idealistically inclined.
No matter how innovative and built on well-intentions cryptos like Bitcoin were made, there will always be a certain number of users that will seek to take advantage of it for more surreptitious uses. Whether it's for extortion, as we've seen from WannaCry in recent memory, or for transactions on the dark web such as trafficking or bribery, the financial industry has had to battle through these malpractices in order to learn its lessons.
While the financial industry continues to battle against these malfeasances, it has the strategic advantage now, and that is that it offers a highly centralized system.
The future of cryptocurrencies can be divided up, to a certain extent, into two distinct scenarios. The first being that if cryptos remain decentralized, the same volume of poor practices will go on without any legal recourse or protection, roughly translating to a ceaseless, wild west of crypto. This means that any unification of exchanges cannot be achieved due to an unnecessary growth in poor practices, extortionate fees and a general lack of trust.
While decentralization and cryptocurrencies are dressed up by idealists as being the best counter to cybercrime, they each have their own unique issues that leave them open to malicious intentions. From investors on illegal exchanges to major influencers, they are all vulnerable to hackers for one reason or another. In some instances, the openness of YouTube and Twitch crypto-broadcasters has resulted in the net loss of millions due to co-ordinated efforts to make off with their money.
If there is any hope for cryptocurrency when it comes to earning mainstream appeal while attracting the attention of financial, retail and banking institutions, it needs to take the initiative in providing an improved level of security and scrutiny of those elements in the crypto ecosystem that may pose a threat to other users in some shape or form.
The ability to hold individuals, exchanges or groups accountable will be the make or break subject for the cryptocurrency world, and should it manage to usher in this era of improved security, it will be a better, more open and more widespread world than the one we see now.
The Question of API – Use a FIX-Based one
Some of the issues that hounded the trading community have been those surrounding the friction in completing transactions, while also allowing customers to communicate effectively with the parties involved. How were these issues solved? It was through the development and introduction of FIX API back in 1992 by the duo of Bob Lamoureux and Chris Morstatt.
Since its introduction, It's allowed for a far more seamless method of communication and transactions between the various parties. Before this system, there only ever existed manual communication, which slowed down market movements significantly.
Currently for cryptocurrencies, there's no such system in place to streamline peer to peer transactions and communications between buyers and sellers. This is especially odd when considering that having a more connected system would be a great advantage for cryptocurrency of all places, it's one that it hasn't explored but one that it certainly should.
Playing Ignorant Isn't Going to Help Growth
One of the other pressing matters that the cryptocurrency world is presently facing is this: It's becoming overly saturated, which isn't so much of a bad thing for cryptocurrencies, but it carries with it some serious concerns. With no organization, strong regulation/oversight and no truly unified or cohesive structure: that's a recipe for disaster in the long run.
At the moment, the only real unifying element for cryptocurrencies is the simple fact that people buy into them as a means of obtaining a profit, anything beyond that connection is a pleasant coincidence. If this continues, cryptos will wallow where they are right now when they could be something far more.
Exciting? Yes, Innovative? Yes, there's no arguing that it is a truly thrilling and fast-moving field to be in, but it's stuck in a position where it's simply not streamlined, user friendly, which means that any chance of drawing in a major population is unnecessarily reduced.
In ignoring the hard-learned lessons from generations of investors from Wall Street, the cryptocurrency world is doing nothing but stunting its own growth and potential for no sensible reason.
Plain and simple, market volatility isn't appealing to anyone, simplicity, on the other hand, is nothing but appealing. Taking the latter course means adoption rates increase, the number and ease of transactions improves, inevitably taking the cryptocurrency market in its entirety, to a far more exciting place.
While it remains one of the most disruptive areas of innovation for as far as anyone can remember, being chauvinistic towards those institutions it hopes to change does no-one any good. The subjects of security, regulation, accountability and unity are ones that cryptocurrency can do well to learn about under the tutelage of Wall Street.
Much like in the world of banking, people want an easier, safer, faster way to store, move and, ultimately, protect their assets. And much like any good bank, the cryptocurrency market must mould itself towards the greater ease of the end user, not the other way around. The cryptocurrency world, in taking on old lessons, can find itself running at far greater paces than it thought possible before.