In this article, we will discuss three main trends, which can determine the direction of cryptocurrency world development for years ahead.
Global cryptocurrency regulation
The development of legislation on cryptocurrencies, the implementation of regulatory instruments by banks and supervisory financial authorities, and the increasing attention to an alternative currency on the part of governments represent a transition of the global financial system from ignoring to accepting the world of cryptocurrencies and a desire to take control over it.
But until officials fasten blockchain with a bureaucracy chain and Bitcoin-wallets can be registered without an ID, the fundamental value of a cryptocurrency, which is independence and decentralization, is still accessible to millions of people around the world.
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One more cryptocurrency trend is a concept called “stable currency”.
The stability, which is planned to be achieved through the backing of a coin by real assets (in most cases, fiat money), is aiming to solve or at least ease one of the generic problems of cryptocurrencies — high volatility.
The problem, as many believe, is the reason why cryptocurrencies are still on the margins of the financial world and haven’t yet become full-fledged monetary units.
On the one hand, the high volatility of a cryptocurrency makes it a good trading instrument; on the other, the traders need to store their profit, and it is good when they can do so using a cryptocurrency as well, instead of searching for other less known and understandable ways to make a long-term investment.
A cryptocurrency backed by gold can become one of the most sustainable stablecoins, and it looks like something Chine is aiming at. The gold reserves of the country have been increasing since the moment when news on the recent launch of the national currency first appeared.
An example of already existing stablecoin pegged to gold is Digix Gold Token. But dollar-pegged option, where dollar plays the role of gold, is also possible.
The wave of ICOs showed its legal untrustworthy (an ICO became a popular instrument of fraudsters) and that the risks are high, which draws the attention of state regulators. The tokens with a transparent legal basis were needed.
Meanwhile, an ICO can still be a crowdfunding way of investing, while an STO can become a reliable option for professional investors, who need legal guarantees.
It’s safe to say that stablecoins provide financial provision, while security tokens provide legal provision by acquiring a status of securities.
SEC will be one of the major moderators of security tokens, which will decide on legal regulation of both companies issuing STOs and investors, who will have to undergo accreditation. In return, the compensation is granted in the event of failure, and risk mitigation is provided by signing SAFT (Simple Agreement for Future Tokens).
According to some experts, other advantages of an STO are the following:
- Fractional ownership;
- High level of market’s liquidity;
- Possibility of creating an ecosystem of connected services.
Its main disadvantage is, obviously, a high threshold value, which can be overcome by accredited investors only.
The combination of these trends illustrates that the wild west era of the cryptocurrency industry is over. And the end is the same as always — savages are brought into the field of state regulation.
Taking control of tokens, which are essentially just a superstructure above a cryptocurrency, governmental institutions are studying how to control the industry as a whole.
Therefore, the main cryptocurrency trend can be defined as the following: governmental institutions are trying to establish control over the cryptocurrency industry.
Will they succeed?
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