Cryptocurrency is currently experiencing a slump. Confidence is at an all time low, and with scandal after scandal in the space, it begs the question, where does crypto go from here?
However, for veterans in the industry, the cycles are brutal. When the price of BTC drops, the media writes stories about the end. But when there is a bull run, optimism is off the charts.
Even though crypto is plagued with terrible news at the moment, there are still positives happening. The recent Ethereum merger was hailed as a success by co-founder Vitalik Butterin, and the move reduces carbon emissions by 99%.
If you are just getting started with cryptocurrency, the current state of the market is quite the learning curve. However, the old adage in investing is that fortunes are made in bear markets, buy low sell high!
Cryptocurrency and Mainstream Payment Methods
The use cases of cryptocurrency continues to grow, today there’s more online and offline merchants to spend cryptocurrency. Crypto credit cards continue to rise in popularity, where you use your crypto as collateral, and borrow in fiat currencies like the US Dollar or Euro. These cards use Visa and Mastercard technology for regulatory compliance as well as security. Some examples are the crypto.com and Paxful credit card.
Visa still remains the king of transactions per second (TPS), as the platform is able to execute 24,000 TPS. Bitcoin’s TPS is 7, therefore Visa is still the number one method for online purchases. However, crypto is catching up. Bitcoin for example, is popular with payments, especially when it comes to deposits while gambling. Then again, locating safe crypto casinos can be difficult because of regulatory concerns.
On the other hand, top Visa casinos are all properly licensed and provably fair. For the convenience of their users, comparison sites compile all of the casinos in one convenient location and provide objective ratings and feedback for each. New players can learn about the most recent signup bonuses and how to make deposits and withdrawals using Visa.
The interesting thing is that crypto used to be up against mainstream payment methods. But in recent years, Visa and Mastercard are working with cryptocurrency protocols, to improve banking solutions to all. These range from faster payments to more secure crypto wallets.
The major weak point at the moment are cryptocurrency exchanges. The recent collapse of FTX has led to investors losing over $8bn in funds, which has financially ruined many crypto traders. This panic has also led to rumors about the liquidity of other exchanges. Currently, there are very few regulations, and many exchanges are based in offshore countries, therefore oversight is minimal.
In turn, this has led to decentralized exchanges (DEXs) becoming more common. Mainly because the CEO does not have access to the funds like FTX does or even Binance.
Exchanges are the most profitable aspect of cryptocurrency, because for every trade, the exchange makes a commission. Greed is often the reason for these collapses, or even worse exit scams. Protecting people’s funds is a real issue going forward, but there’s very little movement on government legislation, especially in the USA.
Cryptocurrency has come such a long way in a short space of time. And there’s a lot of intelligent people leaving traditional industries like banking to work in crypto. In addition, many mainstream financial institutions are taking baby steps into exposing themselves to crypto. JP Morgan and Fidelity recently announced they would allow their clients to hold BTC in their portfolio.
It’s vital to remember that crypto bull runs go in cycles, and then spectacularly crash. It’s just a part of the cryptocurrency market, and if you do not have the nerve for huge volatility, trading is not for you. In 2013, BTC went from $30 to $2 in a short space of time, and the mainstream media hailed the end for crypto.
The same thing happened in 2018, when Bitcoin started to enter the mainstream. It skyrocketed to $20k, and later plummeted to $3k. The lesson is, nobody knows how much this new type of asset is worth.
In the short term, the industry is struggling, but smart people are still building great products where cryptocurrency will solve many issues in the future.