2018 saw Bitcoin prices plummet to a fraction of their previous value. After remaining in a slump for over 5 months, Q2 2019 finally brought recovery.
With that recovery came renewed interest in cryptocurrency investment opportunities. New investors and seasoned pros, retail and institutional investors alike, are on the lookout for new, enticing cryptocurrency investment options.
With the coinciding explosion in fintech technology, investment options abound.
Cryptocurrency also has the unprecedented disadvantage of being virtual. When the housing market collapses, investors jump in headfirst. Recovery is inevitable.
Even if profitability is slower than expected, real estate investors have a tangible product to show for their investment. It is a product that is large, useful, and typically insured against damage or destruction.
Investing in cryptocurrency could not be less similar.
However, investors who fall for cryptocurrency tend to fall hard. They are loyal, and they are committed to the success of an ecosystem that offers promises and a future that traditional banking systems and fiat money simply cannot compete with.
A positive feedback loop
As investors begin to see the incredible potential of blockchain for the fintech world, be it remittance payments, cross-currency functionality, or smart contract capability, the value proposition increases.
With even institutional investors entering the cryptocurrency space, a lot of money is pouring in. The reality that cryptocurrency is no longer a niche market is becoming more and more apparent with each passing day.
These advances in the market require stronger tools to manage trading, investments, and market growth.
This is how cryptocurrency exchanges emerged, and it is how more are popping up with each passing day. Bitcoin and the like cannot be traded on the New York Stock Exchange - yet. Therefore, investors needed an alternative way to trade crypto. Digital currency exchanges are now a huge part of the market, and integral to the success of any cryptocurrency platform.
Cash cow – fiat or otherwise
Investors, both retail and institutional, now have over 250 cryptocurrency exchanges to choose from.
A variety of exchanges, providing different service offerings, different markets, and different specialties, is the current answer to the risk of a crypto exchange monopoly.
With the rapid proliferation of blockchain technology within fintech, consumers can be confident of security, liquidity, and low fees using most exchanges. At this point, many investors are simply waiting for a platform to release the exact technology they need for their individual investment purposes.
For example, European investors saw an offering from relatively new exchange Globitex recently in the form of IBAN account number services. For investors in the international banking world who are still toeing the line between fiat and cryptocurrency, an IBAN number is a necessary part of their investment lives. Globitex offers this product through the EURO wallet, which also simplifies the EU-compliant SEPA payment process.
The reality is, 3rd party payment functionality remains a valuable function for some. Newer, smaller platforms like Globitex, Bisq, and Kyber provide these services. They do so while eliminating the monopoly risk from digital exchange giants like Binance, Coinbase, or even Gemini.
Currently, the top exchange by trading volume, markets, and practically every other ranking is Binance. With profits approaching $1 billion USD, Binance is a clear leader in the exchange space.
For some investors, Binance is the obvious exchange choice. It is flexible, powerful, customer-centric, and secure by way of billions of dollars in assets.
For others, this level of monopoly raises big red flags everywhere. The Binance machine flies in the face of a decentralized ecosystem. Its profits are enormous. Furthermore, not is it only largely unregulated, Binance is exiting markets such as the U.S., where regulation is inevitable and will likely be implemented sooner rather than later.
Binance has the potential to become the worst of both worlds – fiat and cryptocurrency. It may be the right choice for some. It doesn’t mean CZ’s heart isn’t in the right place. For others, and for the future of a decentralized economy, the answer may lie in using smaller exchanges.
Regardless, cryptocurrency and the exchanges that make it viable are here to stay.