Businesses today must keep up with the times to entice all customers and give them little or no reason to go elsewhere. With the world getting smaller by the day due to the internet and how it is used by businesses and customers alike, companies who aren’t riding the wave could find themselves struggling to keep up with their competitors.
The best way in which you can boost your business is to be on top of the latest technology trend and use it to its maximum advantage, and embracing cryptocurrencies like Bitcoin and Ethereum would certainly do that. However, before you decide that taking Bitcoin will make your business explode overnight, there are a few other things you need to consider first.
Bitcoin is very much a hot property, as is Ethereum and, as of this moment, Dogecoin. They are in the news every day, and ‘Bitcoin prices’ is one of the most searched terms on Google. It would be easy to assume that cryptocurrencies would naturally be used to purchase goods in the same way we once used cash.
However, this is not currently the case. It is not because Bitcoin and other cryptocurrencies are not safe and secure (because everybody already knows this is not the case), but instead, it seems to be a problem of perception, which is always a critical factor in the mass adoption of anything new.
While those with a decent working knowledge of Cryptocurrencies do not share this bias, there is a strong current perception (especially in the face of daily stories about the rising price of Bitcoin) that Bitcoin is something you invest in, not something you use to buy everyday items.
It could be argued that, given the current perception of Bitcoin almost as a commodity, that the person in the street is as likely to pay for a newspaper or a can of Red Bull with Bitcoin as they would using a bar of gold.
This looks to be the main barrier in the way of accepting, for example, Bitcoin as a method of payment online. The technology should never be a problem; but instead, it is the willingness of the customer to use it.
Social media can play a significant role in this by normalizing the use of Crypto for everyday purchases. Seeing influencers using Crypto as a currency and not something that just sits in exchanges like Coinbase will increase the ability of regular users to see digital currencies the same way they see the ones they use every day.
Suppose you are not sure about using cryptocurrency or feel that perhaps this is not the way forward. Just think about how customers used to pay on sites like eBay 20 years ago, which was mainly cheque or cash through the post. Paypal was not really trusted as a payment method, whereas now it is most definitely preferred and indeed requested by most if not all sellers.
Cryptocurrency, the digital currency created with cryptography technology, continues to increase in popularity. More users continue to adopt the use of cryptocurrencies into their payment practices as a secure method to send money without geographical limitation. This might sound familiar. After all, the American platform Paypal operates with a similar mission. For those unfamiliar, PayPal has continued to operate forward-thinking digital payment options for nearly 20 years. Now, over 300 million consumers and merchants transact using the platform. With many similarities in place, it only makes sense that Paypal Holdings Inc. (NASDAQ: PYPL) would eventually leverage the increased interest in cryptocurrency since new cryptocurrency users require a trusted platform.
Luckily, PayPal has since made the announcement that all U.S. users can buy, sell and hold specific cryptocurrencies. This announcement is promising for future adoption since many users struggle to find a Bitcoin Exchange that they trust. Therefore, purchasing on Paypal might be a small step to ease new cryptocurrency users into the crypto space.
To start purchasing, Paypal requires users to have a Cash or Cash Plus account. Further details can be consulted using the terms and conditions. While PayPal is designed as a secure method to send, receive and access funds, the app itself cannot protect users against the volatility of the cryptocurrency they choose to purchase. Therefore, the same level of attention and research should be considered before making any purchases. The Paypal app has released many articles designed for beginners to help users learn at their own pace. Resources provided include information about the cryptocurrency ecosystem's inner workings, the risks of investing and information on future technology initiatives.
After determining the type of cryptocurrency that a user wants to purchase and in what amount, the tactical steps are easy. Users can select "crypto" from the Paypal dashboard. From there, users can choose from available cryptocurrency options, including Bitcoin (BTC), Ethereum (ETH), Litecoin (LTH) and Bitcoin Cash (BCH). To make a purchase, the user simply needs to click the "buy" button, which will prompt them to verify their identity. Paypal will display the spread to show users the conversion rate and associated fees they will pay. If numbers look favorable, users can proceed with the transaction, adding coins directly to their PayPal digital wallet.
Within the application, users can continue to track the prices of their currency through different charts. Alternatively, users have the opportunity to make purchases from any sellers that accept PayPal. To do so, the cryptocurrency used to make a purchase will be instantly converted into fiat currency, which will be paid forward to the merchant.
This announcement is only the beginning of Paypal's plans for cryptocurrencies. The company also announced that adding this offering to Venmo is also on the roadmap for 2021. However, many continue to question the market for this service as the potential still exists for consumers to lose money if they don't know what they're doing. Paypal rebuttal was that this initiative would increase the education around cryptocurrency offerings.
To put users at ease, the New York State Department of Financial Services (NYDFS) issued Paypal a "Bitlicense," one of the first of its kind. This framework was created in the efforts to encourage, promote, and assist interested institutions to have a regulated way in which they could join the cryptocurrency marketplace within New York. Paypal also works in Tandem with the Paxos Trust Company, another American company, to increase security. Users can also rest assured that Paypal has dabbled in this area before, once offering services with Facebook's digital currency, Libra. Although this was later suspended, many financial regulators took note of their efforts.
This initiative continues to excite many cryptocurrency enthusiasts as the path to widespread adoption becomes more clear than ever before. On the business front, PayPal has also taken an advantageous position to help lead the charge toward digital currency development by central banks and large corporations. Dan Schulman from PayPal shares that working with regulators on CBDC's is still among the company's goals.
Bitcoin reached a value of over $34,000 for the first time on Sunday, a scant three weeks after crossing the $20,000 threshold.
Already the world’s most popular cryptocurrency, Bitcoin now has a market capitalisation of over $600 billion, vying for position with the likes of Facebook and Tesla. It has also passed Visa’s market cap, placing it as the world’s largest financial service.
Cryptocurrencies flourished during 2020 as COVID-19 lockdown measures and fears of a global recession sent investors in search of alternative financial assets. Bitcoin in particular saw strong gains after PayPal announced that it would allow it and other cryptocurrencies to be traded on its platform, a key step towards the mainstream adoption of cryptoassets.
Overall, the price of Bitcoin surged by over 300% during 2020. In the opening days of 2021, its value has risen by almost $5,000, with an 18% jump on Sunday morning before gradually receding.
Equally impressive, new statistics indicate that Bitcoin’s 30-day average daily trading volume between 1 December and 31 December reached $39.1 billion, higher than the average daily trading volume of Apple, Amazon, Microsoft, Facebook and Alphabet stock during the same period ($37.68 billion).
“What’s happening now – and it’s happening faster than anyone could ever imagine – is that Bitcoin is moving from a fringe esoteric asset to the mainstream,” said Matt Hougan, chief investment officer at Bitwise Asset Management.
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“If it’s going mainstream, there is just so much money on the sidelines that is going to have to come in and establish a position that it leaves me very bullish for 2021.”
In the coming weeks, US PayPal account holders will be able to trade digital coins including Bitcoin, Litecoin and Ethereum. PayPal also plans to expand trading options to Venmo and some new countries in the first half of the new year.
David Smith, a cryptographer from the Smart Card Institute, offers Finance Monthly a beginner's guide to various financial markets and what a prospective investor can hope to get out of them.
Most people get intimidated by the idea of making an investment – mostly because they don’t understand the different types of financial markets and which one could be the best suited for them. Our article today sheds light on the different types of financial markets so that you can make better investments in the future.
Most people are aware of stocks. They are probably the most popular and simple kind of investment that has been around for a really long time. Basically, when you invest in stocks you are buying a part of a share in a public trading company. Some of the biggest companies in the world today such as Microsoft, Apple, Samsung, all sell their shares. However, they sell only a small percentage in the stock market.
Once you buy the stock and the prices go up in the stock market then you can sell the share at a profit. The downside is obviously if the price goes down and you will go into a loss. If you wish to buy stocks then brokers are the right people to get in touch with as they will help you make an investment.
Buying a bond means you are lending money to an enterprise that is either government-owned or is a business. Businesses issue corporate bonds whereas the government issues treasury bonds or municipal bonds. Once you have held the bond for a particular time period and it reaches maturity, you can acquire the bond with interest. Bonds are generally a low-risk investment and come with a lower return as compared to stocks.
Buying a bond means you are lending money to an enterprise that is either government-owned or is a business.
This is a relatively simpler investment. Foreign exchange investors buy a currency that is expected to increase in value in the future and then they make a profit out of it. The profits all depend on the exchange rates at the time of selling.
Mutual funds refer to a pool of investors who are investing in several companies at the same time. These funds are either managed actively, in which the manager chooses the companies for the investors to put their money, or they can be passively managed, in which the fund tracks some stock market investment. There can be mutual funds which are a mixture of actively managed and passively managed funds.
One of the safest forms of investment is a certificate of deposit in which you give money to a bank for a certain time period and once the time period is over you can withdraw the money along with the interest which was pre-determined.
Investing in physical assets means you are buying an asset that holds a market value and can be liquidated when you need the money. These assets can be precious metals, jewelry, property, etc. As in the case of most investments, investors who put their money here expect the prices to increase so that they can sell their property, jewelry, etc. at a higher price.
Cryptocurrencies can be thought of as digital currencies that have market value and are a great investment option. Bitcoin is one of the most famous cryptocurrencies that is now coupled with advanced smart card technology. However, cryptos can be an extremely risky form of investment as their value fluctuates tremendously.
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Most people are offered a retirement plan at either their workplace or some other means. Retirement plans are not exactly an investment category but they can be thought of as a means to make other investments as they give you countless advantages such as tax leverages.
A lot of people use annuities coupled with their retirement plans to make investments. Once you purchase an annuity you come to terms with a contract with an insurance company that provides you with payments periodically. The payment duration and the amounts are both predetermined. Annuities are a low-risk investment but they are low-growth as well.
Options can be thought of as a complex kind of stock. An option gives you the ability to either buy or sell a certain asset at a predetermined price at whatever given time. An option may decrease in value and might end up in a loss for the investor.
Overall, financial markets make it possible for companies to acquire capital due to their regulated and open system and enable businesses to balance risk with the help of foreign exchange, commodities and other derivates.
International rolling lockdowns has left an undeniable mark on the economic future, leaving many of us uncertain and concerned about our wealth. The world is changing rapidly, and these changes influence investor preference; meaning that suitable investments in 2019 may no longer be solid sound choices. Even though predictors can sometimes be misleading, the following predicted trends are most likely to survive the impacts of the economic downturn and reward savvy-investors with high profits.
Digital currencies such as Bitcoin, Ethereum, and several others are leading the way towards an innovative future. There has never been a better time to invest in blockchain-based currencies as profit margins have not shown negative influence as a result of the Covid19 outbreak. If you are looking to invest in Bitcoin, you will be able to transact between traditional currencies and digital currencies according to your strategy, which means you can move from Bitcoin to Euro or vice versa.
The value of Bitcoin is fuelled by popularity. Because investors did not pull out at the first signs of economic uncertainty, many now consider the revolutionary digital currency a safe haven investment in line with likes of commodities such as gold.
Micro investing is fast becoming a popular trend in the world of investors as the solution allows anyone to invest, even with smaller amounts. As we witness the launch of several innovative micro-investing apps and platforms, this trend serves as an opportunity for all to build an impressive portfolio regardless of existing wealth. You will be able to spread your investments over several opportunities and gradually add funds as your budget allows.
In days gone by, only those with large lump sums of money could invest in lucrative opportunities, where we are now gifted with the opportunity to invest with as little as $10. The solution also allows investors time to navigate the markets without concern of losing everything.
It’s not exactly news that investing in property can be exceptionally lucrative, although, most of us assume you need quite a fortune to invest in real estate and so, we shun the idea. However, for those who would like to invest in real estate without having to worry about the nagging details such as caring for properties and tending to maintenance issues, real estate investment trusts are the perfect solution.
A real estate investment trust is quite similar to mutual funds while being strictly aimed at properties. With the prices of houses continually rising, this type of investment may genuinely be the perfect solution for those who would like to profit from properties without actually having to buy them.
Before you start investing, pulling out of existing investments, or diversifying your portfolio, it is crucial to crafting a tailored investment strategy. Now more than ever, it is vital to monitor your investments daily, especially if you are opting for stocks. Feeding investments should only be made on value declines to boost profits.
Bitcoin trading can be complicated for beginners. In fact, the cryptocurrency space is risky for everyone, both the beginners and the experienced investors. Unlike in stocks trading, the crypto sphere has no central body that offers guidance to investors. You see, horror stories, hype, and rumors rule the internet, and it is sometimes difficult to separate facts from hearsay. Riding on hearsay and rumors is a recipe for failure in Bitcoin trading.
According to Crypto Head, most Bitcoin investors who have lost money didn’t conduct proper research. Just like in any other investment venture, you should have all the facts straight before getting your feet wet. Below are important tips for new Bitcoin investors.
Bitcoin trading has been here for a few years now, and a lot has changed since its emergence. If you are just getting started, you need to conduct your own homework. Understanding what you are getting yourself into will help you make informed investment decisions. Cryptocurrencies provide a brilliant investment opportunity, but they are not without risks. Ignore the hype and dig deeper. Learn about the underlying Bitcoin technology and how the whole system functions.
Before you run, learn to walk. You need to understand the basic mechanics of Bitcoin trading. Learn how to sell and buy Bitcoin, and the easiest and the most secure platforms to start buying Bitcoin. Coinbase is a good place for new Bitcoin investors because of its intuitive interface and ability to begin buying other major cryptocurrencies such as Litecoin, Ethereum, and Bitcoin Cash.
Like with all other financial investments, it is important to learn how to guard your assets. In this case, you need to protect your digital assets from scammers and cyber attacks. You can store your Bitcoin in Ledger Nano S wallet, which is regarded as the most secure Bitcoin wallet. TREZOR is also a good option.
After a few weeks of deep research, you may feel like you know almost everything about Bitcoin trading. Well, you may know a lot, but that does not mean that you should invest blindly. Risk is inherent in all investments, and it is the same with Bitcoin trading. Digital currency is still developing, and you need to tread carefully. The risks involved are incredibly high, which implies you can either win big or lose your entire investment.
First invest small amounts and see how things turn out before increasing your investment. Don’t chase Bitcoin prices; let them come to you instead.
Putting your eggs in one basket can be a grave mistake. Well, at least when it comes to investments. Apart from Bitcoin, there are other components in the crypto space that you can invest in. Diversify your investment effectively. You can invest in Litecoin, Ether, Bitcoin Cash, and Ripple.
If you're embarking on a Bitcoin investment, the above tips should hopefully provide useful information as you enter the crypto space. But you need to buckle up because it's possible the ride ahead is going to be wild one. It's well known that the digital currency market is incredibly volatile, so you will need strategies to manage price fluctuations and see return on your investement.
The figure is the average of 10 FinTech leaders' individual predictions, who speculated what might be in store for the coin in 2020 in a new report from financial comparison website Finder.com. With Bitcoin’s recent price decline, nearly everyone on the panel (90%) agreed Bitcoin has not been immune to corona-triggered asset sell-offs.
Technologist and Futurist at Thomson Reuters, Joseph Racynski, noted that in the current climate institutional investors were quick to dump Bitcoin.
“The reason for the drop in BTC price is a direct result of institutions unloading the coin in a rush to cash as soon as the virus impact was identified. It happened across all assets, but what it proved was that institutions actually did invest over the last few years in crypto”, he said.
However, just half the panel (50%) say the decline is a result of Bitcoin's failure to hold its price as traditional markets drop, suggesting Bitcoin might not be simply mirroring the equities market.
Either way, recent price movements have impacted Bitcoin’s viability as a safe haven asset, according to a panel majority (60%). Managing Director at Rogue International, Desmond Marshall, said techies and coin buyers wishfully hope bitcoin could become a safe haven asset like gold.
Recent price movements have impacted Bitcoin’s viability as a safe haven asset.
Meanwhile, Co-founder of Finder, Fred Schebesta, said that a short term correlation with traditional assets does not diminish Bitcoin’s status as a safe-haven asset.
“Aside from Gold, the list of alternative assets to consider as a hedge against uncertainty in the global markets are far and few between. To me, Bitcoin remains one of the most attractive assets to help diversify a portfolio looking to hedge risk in the coming years”, he said.
Managing Director at Digital Capital Management, Ben Ritchie, conceded that Bitcoin is currently seen as a high-risk asset but argued it could be a safe haven down the track.
“Bitcoin is being positioned as a future safe haven but currently is considered as a high-risk asset", he said.
“The recent short-term liquidity impact contributed to its correlation to equity markets and does not impact its future viability to become a safe haven. It continues to trade more in line with risk assets than safe havens, which is consistent with its performance to-date in periods of extreme market volatility… It is interesting to note that even gold has suffered from violent price fluctuations recently dropping approx 12% before bouncing off its 50-week moving average.”
While the panel was divided on the future of Bitcoin, they largely agreed that market conditions will eclipse any hype as a result of the halving.
COO & Co-founder at MarketOrders, Julia Sukhi, was just one of two (20%) panellists to say recession fears won’t nullify hype around the halving.
“As markets become weaker and chaotic, there will be certainty in the BTC markets in terms of the halving so more attention will be attracted to this event”, she predicted.
Crypto’s kryptonite?
In guidance released in June 2019, the Financial Action Task Force (FATF) revealed its latest standards for mitigating money laundering and terrorist financing. The 200 global jurisdictions committed to FATF recommendations are required to comply with Recommendation 16 aka the “travel rule”. What this means for Virtual Asset Service Providers (VASPs) registered or licensed within FATF member countries is that they will be required to exchange and hold personally identifiable information (PII) to each other when transferring crypto assets. Many in the cryptocurrency industry have baulked at this and other instances of increasing regulatory oversight, but could this actually be the push the crypto industry needs towards mainstream adoption in the financial market?
The majority of blockchains do not have a built-in protocol to automatically capture the real-world identities of its users, and digital assets are either pseudonymous like Bitcoin, or anonymous like privacy coins. For the more libertarian-minded, this is the big draw towards cryptocurrencies in the first place, though some now view it as a weakness that is impeding the adoption of digital assets among the masses. Over 50% of Americans own stocks, but only 2% own Bitcoin, as estimated in a 2018 Wells Fargo/Gallup poll. About 1 in 4 investors in the US are intrigued by crypto assets but are reluctant to buy it in the near future considering its price volatility and uncertain legal status. There is a need for stability and security in the crypto industry, and regulations could be the key to establishing a safer and more mature environment that can benefit the industry and its stakeholders in the short and long-term.
Setting the rules in black and white
At the moment, crypto-friendly financial institutions and banks are few and far between. Established institutions are put off by the legal uncertainty surrounding virtual assets, a lack of technical knowledge, as well as the costly systems for AML/KYC that are required of them when complying with ambiguous and divergent regulations. On this point, putting in place a clearer and coordinated regulatory framework can help financial institutions categorise and understand the functions of various cryptocurrencies, effectively giving them the green light to invest in virtual assets. We can see that regulation is already affecting the industry in the slew of privacy coin delistings that show how VASPs are taking tougher measures in the move toward compliance.
It seems like any small sign of cryptocurrency’s wider adoption can trigger a substantial price jump.
Eventually, regulations like the “travel rule” will lead to a divide in crypto assets between the regulated and unregulated sides of the coin. By tying identifiable information of users to virtual assets, crypto exchanges and regulators will be better able to identify and validate legal transactions while recognising those tied to illicit activities such as money laundering or terrorism funding. Criminals and bad actors will be driven underground where their digital assets can only exist through legal ambiguity or in clear violation of the law. Unregulated assets will in time become less fungible and their value will be weakened, whereas robust regulation will allow compliant virtual assets to become increasingly stable and fungible, thereby improving their appeal to institutional and individual investors as a legitimate long-term investment rather than a short-term speculative opportunity.
Getting the price right
It seems like any small sign of cryptocurrency’s wider adoption can trigger a substantial price jump. But whether it’s Facebook’s Libra launch or China’s newly announced pro-blockchain stance, the excitement inevitably peters out, and the value of cryptocurrency drops again. A high cryptocurrency price should not be the end goal — Bitcoin’s rapid price rise in 2017 ended in a crash and massive losses for investors because of market manipulation, over-valuation, and financial scams. What cryptocurrencies need instead is a level playing field where real identities can be tied to illegal transactions, and market manipulators can be stopped and held accountable. In a regulated marketplace, individual virtual assets can be better-judged on their merits and the economic forces of supply and demand, thereby attracting a larger pool of investors who will provide liquidity and allow for a more accurate valuation of cryptocurrency’s worth.
Regulation will also make virtual asset ownership more secure, and set the stage for virtual asset custodians and owners to be more accountable in their transactions. VASPs will have the ability to reject suspicious transaction requests, stop irregular dealings in progress, or reverse transmittals after the fact if law enforcement can establish that they are tied to unlawful conduct. Lawbreakers and con artists will know that they leave a virtual trail behind them even whether their crimes are successful or not. In the long-run, increased cooperation between VASPs and financial institutions means that more sophisticated and technologically advanced security solutions can be developed for the protection of legitimate crypto users. For instance, traditional finance is more advanced in AML-compliance, and VASPs with access to this professional expertise will be better equipped to identify bad actors on their platforms.
In a regulated marketplace, individual virtual assets can be better-judged on their merits and the economic forces of supply and demand, thereby attracting a larger pool of investors who will provide liquidity and allow for a more accurate valuation of cryptocurrency’s worth.
Going the distance
It is surely only a matter of time until we have a solid regulatory framework with which crypto exchanges can operate in different markets. If there is enough coordination between regulators, VASP users will be allowed to send virtual asset transmittals to any regulatory-compliant destination in the world without needing to undergo time-consuming KYC registrations each time they open an account. A universal digital profile linked to their personal identities can instead be created and used for more efficient trading of virtual assets. With improved regulation, traders and institutional investors may be more willing to invest a larger portion of their portfolios exclusively in cryptocurrency if it offers them the same protection as physical currencies.
All in all, it is short-sighted, and ultimately futile, to rail against impending regulation of the crypto industry around the world. Increasing regulatory oversight is merely a step towards mainstream acceptance for cryptocurrencies, and there are far more benefits to outweigh the negatives in the long-run. The writing is on the wall and for crypto to keep growing as a sector, we need more than the experts and enthusiasts to get on board — we need the general public to have trust in and access to the technology. Some VASPs may be afraid that implementing strict KYC processes will hurt their businesses, driving their customers to exchanges with laxer rules. However, to go the distance and have viable businesses in the long run, it would behove VASPs to get ahead of the game and implement solutions that will allow them to be compliant with minimal disruption to their businesses.
Regulation isn’t the end of the line for the crypto industry, it’s actually the starter pistol going off. So now it is up to the industry players, big and small, to work together with regulators in addresses their biggest concerns and have a say in the direction of the industry’s future.
The research found that:
UK investors are turning to traditional assets as a result of the political uncertainty currently facing the country, new research from Butterfield Mortgages Limited (BML) has found.
The prime property mortgage provider surveyed 1,100 UK-based investors, all of whom have assets in excess of £10,000, excluding pensions, savings, SIPPs and properties they live in.
The research revealed the most common assets investors hold are stocks and shares (53%), property (41%) and bonds (30%). On the other end of the spectrum, classic cars (16%), cryptocurrencies (17%), art and forex (both 19%) ranked as the least popular.
Delving into the factors influencing their investment decisions, 61% believe traditional assets like property are best positioned to deliver stable and secure returns during this current period of political uncertainty. One in five (20%) property investors are planning to invest in more real estate in 2020.
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When it comes to non-traditional asset classes, nearly two thirds (64%) of investors surveyed by BML do not think cryptocurrencies are a safe or reliable investment. A tenth (10%) of those who have invested in cryptocurrency plan to reduce their amount of investment in this asset in the new year.
Looking into the factors influencing their financial plans for 2020, 43% of investors said they have become more socially and environmentally conscious and this will influence their financial strategy in 2020.
Brexit is also playing on investors’ minds. Two fifths (42%) are holding off making any major investment decisions until Brexit has been resolved, though half (49%) are confident in the long-term performance of UK-based assets. This compares to 23% of investors who are looking to assets based outside the UK for their investments in 2020 because of Brexit.
Alpa Bhakta, CEO of BML, said: “In this era of political uncertainty, investors are rallying towards traditional asset classes like property, which are historically resilient and able to hold their value in times of transition. The fact a significant proportion of investors are planning to increase investment into property in 2020 shows that despite Brexit, demand for real estate remains resoundingly strong.
“Interestingly, the factors influencing financial strategies are also changing–on top of security and stability, investors are also taking into account the environmental and social impact of their investments. This will evidently be an important trend over the coming years, and is something both financial services firms and advisers will need to pay attention to in 2020.”
Any business wanting to join them faces a complex assessment process. More than 10 years after Bitcoin was created, there is still a widespread absence of regulation around cryptocurrencies.
A good starting point is to recognise that money is not what it was, quite literally. Cryptos such as Bitcoin, Ethereum, Bitcoin Cash and Gemini Dollar are quickly changing the paradigm for payment. They are also now on a pathway to mainstream use. This process is being driven by the development of apps and platforms to make it easy for people to pay instantly in digital currencies.
So how far should a business go in what is still an evolving, volatile world where valuations fluctuate and conversion processes are tricky? It seems wise to set boundaries: not to invoice in crypto or manage conversion into fiat currency, for example. This means finding a reputable intermediary.
Money is not what it was, quite literally.
Despite the lack of regulation, some benchmarking is possible, such as discovering what regulations different potential intermediaries submit themselves to. There is regulation in New York, for instance.
There are also wider questions, given the digital nature of cryptos. How do those handling transactions protect data? What volumes of money do they move and where? How does their cost model fit into your own system for payments?
It is also important to assess potential partners for their own stability and standing, including their relationships with banks and institutions that are in that world.
This is all necessary because cryptos remain created, held and traded without any underpinning by governments. They exist without the regulation and transparency typical of a state-backed fiat currency.
There are also tax issues. Although cryptos can be a currency, they are treated by most tax authorities as securities and should be declared accordingly. This means potential capital gains liabilities for those who hold and trade in them, and VAT issues if the crypto token is attached to an underlying service.
Beyond that broad definition, there is regulatory fog. Rather than wait for that fog to clear, it makes sense to apply some common-sense standards now, including anti-money laundering and customer ID requirements, to help avoid problems later.
Is it worth getting involved with cryptos at all at this stage? The answer to that will depend on what the business does. For example, the instant, borderless payments enabled by cryptocurrency can be an advantage for businesses that trade globally, particularly those with an e-commerce platform.
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Cryptos are also not bound by a single country’s exchange rate or even location, making it easier for companies entering a global market to accept payments from anywhere in the world. They also avoid banking transaction charges.
It is perfectly possible to set up digital wallets and accept crypto payments directly. But that means also accepting all the associated risk and technical know-how required. Few businesses will want to get that involved in the infrastructure associated with holding the coins, let alone working out what they are worth at the crucial moment an invoice is raised.
Fortunately, there are now a number of well-regarded exchanges. These largely absorb the risk of accepting digital payments and make the necessary transfers, including translating the crypto into the fiat amount billed.
BitPay, for example, is a payment processing provider that converts a traditional fiat currency fee into a bitcoin equivalent as soon as it is issued. The bitcoin price is then fixed for 15 minutes before being automatically renewed using the same process, something necessary because of value fluctuations.
The invoicing firm then receives its payment electronically through BitPay, but as fiat money.
The advantages for the invoicing business from using a reputable provider are reduced risk and the likelihood of prompt payments as clients respond to the 15-minute conversion windows.
Is it all worth the trouble? Just as the way we transact money is changing rapidly, so is the nature of it. For some firms it just makes sense to engage with the future of money now, building knowledge and expertise carefully and organically through experience. My firm is proud to be among them.
Authored by Jon Wedge, Financial Services Partner at BKL.
Consumer knowledge about digital currencies is limited and cash is still king. But many people still hold a positive view about the future of cryptocurrency and are curious about its possibilities.
The seventh ING International Survey on new technologies found that 79% of UK respondents knew at least a little about cryptocurrency (identifying at least one out of five true or false statements correctly). Among this group, opinions are divided as a third (32%) had high expectations for it, just ahead of the 28% with low expectations.
A fifth of this group (21%) agree that crypto is the future of online spending, behind the European average of a third (32%). An equal proportion (21%) say they are open to receiving new cryptocurrency offerings from brands and bodies they are familiar with, agreeing that banks should offer current accounts in crypto.
This outlook comes despite wide levels of confusion about how cryptocurrencies actually work. Although 69% of people understood that crypto is a form of digital currency, an equal number (68%) either incorrectly thought that it is controlled by a central body or said they did not know.
Jessica Exton, Behavioural Scientist, ING, said: “People aren’t clamouring to understand the details of how cryptocurrencies work, or even what they are. But whether we would pick it up if it proved useful remains open to debate. We see country some differences in how people are learning about cryptocurrencies and while smaller groups in the UK agree cryptocurrencies are the future of spending online, relatively few of us are actively sourcing information about them, such as through searching online. More knowledge doesn’t always lead to higher expectations of the future relevance of cryptocurrencies through, indicating many factors are at play. While small groups are enthusiastic about their future use of cryptocurrencies, every-day relevance and demonstrated benefits will be key to turning the crypto curiosity our research reveals, into a true money revolution.”
The survey’s findings, which show a curiosity about cryptocurrencies but also a tendency to trust the familiar, suggest that a digital currency hybrid - a mix of new forms of currency with the familiar elements of regulation, practices and providers we know – could be one way to broaden the everyday use of this type of currency.
Teunis Brosens, Lead Economist for Digital Finance and Regulation, ING, said: “If cryptocurrencies are to become mainstream, technical improvements are needed. But to gain trust and acceptance beyond a core group of enthusiasts, affiliation with existing well-known brands would help. In short, cryptocurrency would need to present itself to potential users from within the existing financial framework, instead of placing itself outside.”
This is illustrated through Facebook’s Libra. While its initial structure does not make it a cryptocurrency, plans to move towards decentralised governance in 2025 mean that it may act as a transitional mechanism.
Despite a relatively favourable view of cryptocurrency among many consumers, our survey found that they are not yet ready to embrace it fully. Only a fifth (20%) of UK respondents would prefer it if cash no longer existed. One-in-five (19%) of those with some knowledge of cryptocurrency responded positively about both their anticipated use of it simultaneously with their use of cash.
This suggests that cash may continue to play a significant role if and when cryptocurrency is adopted on a wider scale. Diversification and choice will be key, depending on availability and preference.
ING's seventh International Survey on new technologies is based on approximately 15,000 respondents in 15 countries, including over 1000 from the UK.
*These results are based on a sample of respondents that correctly answered at least one of five true or false statements about cryptocurrency (79% of total sample).
Cryptocurrencies followers forecast Bitcoin to replace fiat currency and become the only method of value exchange. With bitcoin induced demonetization, Bitcoin should change people’s relationship with money. The fact that people will be the owner of their money and its value is seen as one of the distinctions that will make most people avoid fiat currencies.
Bitcoin prices have become a bellwether for the market. While still difficult to nail down an exact characterization of cryptocurrency and how it fits within the modern financial pattern — whether a currency, digital asset or a commodity — by evaluating the price action in the context of its more established analogs, it becomes apparent that Bitcoin and its peers have reached significant milestones.
The acuteness of the cryptocurrency market has made it obligatory for traders to make quicker decisions and perform transactions faster. These demands led to the development of the Bitcoin apps to offer traders an automated trading platform and more leverage in the market.
The Bitcoin apps enhanced a unique algorithm that can interpret and process the market signals faster such as the bitcoin revolution. If the bitcoin revolution is over then the users are forced to invest from the beginning, without trying the platform first.
The price of Bitcoin has fallen from $13,200 to $9,684, with major cryptocurrency exchanges, including Coinbase, recording a 26.6% drop within a period of seven days. The recent fall of Bitcoin is widely believed to be a technical factor that was pushed by sellers who took control of the market once the dominant crypto asset went below key support levels at $11,500 and $10,500.
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The recent rise was not a rise at all but in fact a fall. in other words, the value of Tether (controversial cryptocurrency with tokens) dropped so in order for altcoins to keep their value up they needed to rise against Tether, when bitcoin rises (assuming Tether is worth $1) altcoins seemingly rise up but not because they keep their value, in fact, they fall in value against USD and BTC but because this fall is not equal to bitcoin price rise, the final result is a rise.
For example, if bitcoin is $1000 and some altcoin is worth 0.1BTC and then bitcoin goes up to $2000 that altcoin if it remains 0.1BTC, will rise to $200 which is impossible for that coin to happen because there is nobody buying it.
What happens is that the rise of bitcoin from $1000 to $1000+ will start creating arbitrage opportunity in ALT/BTC and ALT/USD and as traders arbitrage this the final value of that coin will go somewhere between $100 and $200 and closer to lower bound. So the final result will be an altcoin worth around 0.06BTC which is a big fall but thanks to arbitrage traders the value of it rose a little to $120 in a fake manner.
