T saidThe cryptocurrency winter, with the falling prices of most cryptocurrencies in recent months, has shed light on the vulnerability of Bitcoin and other cryptocurrencies such as real estate stores. . The idea is that, unlike other securities, they will ensure that they are not immune to interest rate fluctuations or become a barrier to inflation. Prices are really stable now but the cryptocurrency has fallen even more. The price of Bitcoin has fallen by about two -thirds from its high in November 2021 and the market value of global cryptocurrencies has fallen from about $ 3 trillion to under $ 1 trillion. Stablecoins, cryptocurrencies backed by securities and other financial instruments that need to help maintain their assets, have been found to be vulnerable during the downturn.
Does this signal the beginning of the crisis for crypto exchange? Probably not. In fact, the cryptocurrency shake could benefit the sector by reducing some of the broad speculative trends and helping to focus on the potential benefits of the technology. Could government regulators, who have previously introduced the crypto industry and no doubt step up their efforts based on past events, cut back on innovation? If planned well, the repair shop can ensure success in this area as it provides stability and efficiency.
The cryptocurrency exchange has promised to lower the currency by reducing the influence of large banks and other traditional financial institutions while increasing access to basic financial products and services that are accessible. small families benefit them. In fact, many of these benefits will not last forever.
New technologies have created products that were unimaginable before, with digital players often less valuable, such as nonfungible tokens and cryptocurrencies. But there are some benefits such as smart contracts that allow financial assets to be bought and sold directly without the involvement of traditional investors. This should, at the very least, lower costs and improve efficiency by creating competition for permanent jobs.
There are downsides to the cryptocurrency exchange that have become apparent in recent months. The lure of easy money created by the introduction of cryptocurrencies has proven to entice many investors. The intoxication of many cryptocurrencies quickly became among the best investors, threatening to exacerbate significant differences in value. The fall in cryptocurrency prices has become significant, as usual, not because of the number of investors and investors who are able to maintain volatility but also on the number of investors. no sales found in the shell of new digital products. Do not understand or pay attention to the problems.
Although the financial problem is not clear. Big banks and other traditional businesses are choosing new technologies as a way to retain their power. For example, a consortium of large banks is using blockchain technology to effectively facilitate transactions between themselves, which can hurt small banks, not to mention the limits of new competition.
What is the fate of crypto currencies?
First, we’ll look at the many improvements that have to be made to prevent investors, clear knowledge, and limitations in taking the risk. Financial information is a big problem. While store investors are free to invest their hard -earned money in any way they choose, at the very least they will enter with their eyes open. Crypto publishers, and their reputers who frequently limit their financial interest to the products they advertise, should be prevented from making promises for high returns with minimal risk.
Second, as the technology grows and works within regulatory frameworks, it can begin to work on improving the performance of the financial system. Most importantly, technology can make some things of money, with costs, much better.
In developing countries, local currency is less reliant, consumers and small businesses have easier access to low -cost digital payment systems. Global payments are much simpler and faster, helping issuers and importers as well as foreign investors send remittances to their home countries. Some of these changes were previously made through simple mobile phone applications but are now being expanded through blockchain technologies and the introduction of cryptocurrencies in countries where the financial system has not yet implemented. the needs of customers and businesses.
Improving local and global governance will help ensure that these new payment methods provide benefits to families and businesses and are not just a source of funding. in criminal activities such as money laundering and drug trafficking.
The regulation also needs to ensure that cryptocurrencies are not shaken by financial security. Stablecoins, which are expected to make payments more efficient within and across borders, have shown monetary vulnerability. Stablecoins are similar to currency pairs or depository companies although they are not regulated like any other. There are concerns about the size and quality of the collateral they will hold, which exposes them to the risk of default if they receive a large number of recovery requests.
The regulatory framework for new products can be improved by reducing the risks that they can increase financial stability or fuel fraudulent practices. While innovations should not be limited to fees and other forms of funding by government involvement, regulators have a legitimate right to avoid misrepresenting the safety of the intended recipient. They are considered to be only paid items but are perceived by users as financial assets.
The U.S. government has the opportunity to take the lead, if it acts quickly, in setting the standards for this industry and leading the global community. It is also important to strengthen digital and financial knowledge so that investors, who can be taken by technology, better understand the problems. The industry itself needs to understand the various types of problems before surfing them and consulting with regulators before handing over to the police themselves. For example, stablecoin issuers should be allowed to be treated as an issuer of financial products rather than just payment services, and they should require the customer’s knowledge to be limited. to fraudulent money laundering. In fact, the management consultant can help the technology find its usefulness and can actually eliminate the existing financial system by correcting its shortcomings.
For a business that is supposed to surround the kingdom, a good Big Brother design can be the perfect tonic.
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