Coin Market Cap
 
The Fast And Furious Future Of Exchanging Cryptocurrency
Breaking News / Cryptocoins

The Fast And Furious Future Of Exchanging Cryptocurrency

The most substantial issues facing the cryptocurrency world are liquidity, scalability and cashing out. Exchanging crypto to fiat remains costly, delayed, insecure and limited. The rise of Bitcoin is what popularized cryptocurrency and what brought us to where we are today, but there are many issues within the Bitcoin legacy system, and the entire financial legacy system for that matter, that limit the extreme potential of cryptocurrencies and other altcoins. The inefficiencies and the flaws associated with cryptocurrency are deterring investors from all backgrounds, which is preventing digital currencies from reaching mass adoption. Cryptocurrency has endless benefits, including simplifying international payments, global remittances, and adding layers of security and transparency to our monetary system, which were unimaginable before the emergence of blockchain. Like most technologies that challenge the norm, cryptocurrency and the blockchain technology behind it have not yet reached their full potential. The good news is that if we follow what the gartner-hype cycle predicts, we might finally reach a point where cryptocurrency is as efficient and revolutionary as it set out to be. The Gartner Hype Cycle claims that there are five cycles that an emerging technology will go through, starting with a trigger, where the excitement of a potential breakthrough technology gains traction. Following this stage, the technology in question will go through ups and downs, flaws and failures and an increasing number of companies will implement the technology to create further and more advanced versions of the product. Well, right now we are somewhere in the middle of the cycle, where the flaws of Bitcoin and older altcoins are being made apparent, but at the same time players in the space are building on the technology to make new and improved versions. Cryptocurrencies were created to work as a medium of exchange through a network of distributed ledgers, rather than having to rely on regulation from a central bank. We have come a long way by eliminating the need for a central control system and by helping industries distribute the power, but unfortunately this isn’t enough. The process of exchanging cryptocurrencies back to fiat currency is extremely inefficient and inconvenient, which takes away from the power of blockchain and deters people from wanting to invest.  Bitcoin ATMs have popped up all around the world to help ease the exchange process, but the time it takes to receive fiat money is unpredictable. The length of time it takes to get cash back depends on the block and the mining process, so you could be waiting more than a day to cash out. The liquidity of the market creates a situation where if the price of a token drops, and you want to cash out or exchange for a different token, the delays in processing could mean that the price could drop substantially before you get your value back. Imagining having $10,000 worth of cryptocurrency and watching its value drop down significantly without having the chance to liquidate the asset and see a return on your investment. In this situation, the immediate response would most likely be to cash out before it drops any further, but because of transaction delays, it might take time before the transaction can go through. This isn’t just specific to Bitcoin- the entire crypto space has been plagued with the delay issue, and so far, a widespread solution has not been put in place. Slow processing and transaction delays aren’t the only flaws within the current crypto infrastructure. Once again, one of the main goals of the cryptocurrency revolution is to remove the need for third parties and central sources of power, which charge hefty fees. Think of a few situations in which people need to exchange/withdraw/transfer money but end up losing out in the process.  One of the main things that comes to mind is international payments and global remittances. According to World Bank estimates, the overall amount of money migrants sent home to developing countries in 2017 alone was $450 billion, however approximately $32 billion in remittances is failing to reach recipients due to the high transaction costs. Currently, global remittances are dominated by banks and remittance platforms such as Western Union and MoneyGram. The problem with this infrastructure is the time, money, and hassle of going through intermediaries. When a person needs to send remittance money internationally, they have to go through a chain of different banks and services. The money will go from a local bank, to an international bank, to various networks of access points until finally it ends up at its destination.  The process can take several days and fees are charged every step of the way. Roughly 10 million Filipinos work abroad, away from their homes, so that they can send money to their families and loved ones in order to pay electricity, water, phone bills, school tuition and so on. This is currently an exhausting multi-step process, costing migrants an average of 7% in commision and fees that are unnecessary. The ongoing issues in the global remittance market help to illustrate the harm in relying on an outdated legacy system. However, the good news is that cryptocurrencies and blockchain really do have the potential to provide instant money transfers from one country to another without these extensive fees. Bitcoin ATMs just haven’t really gotten there. In the near future this will no longer be a problem; in fact, reducing the cost of cross-border payments by just 5% will result in $16 billion in savings each year. With some more strides in the crypto space coupled with more countries getting on board with crypto-based remittances, we could see a serious impact as soon as next year. The benefits that an upgraded crypto exchange infrastructure could provide are endless, as clearly illustrated through the current state of the remittance market. Providing an improved process of exchanging crypto to fiat has multiple benefits, the most important being simplifying overseas transfers and thereby reducing global poverty. On top of that, simplifying the exchange process will benefit investors, big and small, by giving them the opportunity to cash out when they want. Overall, the monetary benefits are infinite. If we follow the Gartner Hype cycle, the stage we are at right now is critical to the survival of cryptocurrency. The value of blockchain technology and cryptocurrency is well-known, and new players in the industry are making waves in the hopes of keeping the technology alive and well. Similar to the dotcom revolution in the late 90’s, many pioneers are now forgotten, such as altavista, the antecedent to Google, or Kozmo, the first online grocery store. The point of mentioning this is, the businesses that make it through the hype cycle are not always the pioneers. The sooner we smooth out the kinks, the delays, the high costs, and the inefficiencies, the better chance we will have of making it through the cycle and spreading the power of cryptocurrency to everyone, anytime, anywhere.

You can share this post!

Freewallet Users Saved Over $500K

Crypto Mass Adoption Depends On Usability And Cross Currency Cooperation