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    Cryptocurrency Market

    With over 2021 currencies and a market capitalisation of $197,601,052,248[1] – even after the bubble burst in January 2018 that saw up to 80% of currencies wiped off the price of the global cryptocurrency market which translated to almost $700 billion[2], the cryptocurrency market is an exciting place.

    [1] https://coinmarketcap.com/all/views/all/ as per latest market updated: 24 Mar, 2019 7:10PM UTC

    [2] https://www.cnbc.com/2018/11/23/cryptocurrencies-have-shed-almost-700-billion-since-january-peak.html

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    What is the cryptocurrency market and why do people use it?

    Cryptocurrency is a market that was created to buy and sell goods and services, the differentiating point in exchanges is that users hold ‘wallets’ of coins or tokens. The tokens possess no intrinsic value in they are not redeemable for another commodity – such as gold.

    Unlike traditional currency, crypto is not issued by a central authority, not regulated and are mainly embraced by early adopting investors[1].

    People tend to use cryptocurrency for a range of reasons, with around 50% of the holders of crypto doing so for investment, rather than to use for transactions or purchases[2]. 

    In addition, the cryptocurrency market offers holders the ability to complete purchases without having to provide personal details. This point raises concerns of black market or illegal transactions taking place, as well as identity theft within the cryptocurrency market. 

    However, one of the major attractions of the cryptocurrency market is peer-to-peer purchasing or transactions. Essentially that is ‘cutting out the middle man’; the bank or financial institution that often charges exorbitant fees for the provision of very little service. 

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    What are the current issues in cryptocurrency markets?  

    Regulation & oversight is seen as one of the key issues around the cryptocurrency market. With no central authority and the reliance of cryptocurrency exchanges to provide a secure and safe wallet facility, users are putting a lot of faith and money into a system with little safeguards.

    There are stories of theft, lost passwords, even James Howells, the software developer who dumped a hard drive with more than 7,500 mined Bitcoin at a Welsh rubbish dump by mistake[3] – only to lose all of it due to no ‘back door’ or system failsafe for the currency in place. Mind you, that 7500 would now be worth around $41,902,275 AUD! 

    In recent times, the Canadian cryptocurrency exchange QuadrigaCX may have lost CAD$250 million ($263.3 million) of account holders’ funds, after founder Gerald Cotten died, taking the password with him[4]. 

    This outlines the high level of security and lack of a governing authority providing little if no protection for the account holders themselves should this occur and lack of liquidity of the crypto exchanges to pay out account holders in these scenarios.

    What should be remembered?

    The cryptocurrency market is new, highly speculative and has experienced a bubble all in a matter of a few years. With its underpinning technology ‘blockchain’ providing the cornerstone for what many say is the future of ledger security and asset management, there is little doubt the cryptocurrency market has legs and will evolve with time.

    In what form it looks like and how the market moves are not yet determined, and if you are thinking in investing or training in the cryptocurrency market or CFD’s it’s always best to get expert advice before investing your money.

    [1] https://www.toptal.com/finance/market-research-analysts/cryptocurrency-market

    [2] https://coinjournal.net/report-estimates-10-million-bitcoin-holders-worldwide/

    [3] https://coinidol.com/lost-bitcoin-stories/

    [4] https://www.smartcompany.com.au/startupsmart/news/lost-crypto-quadriga-gerald-cotten/

    For the full breakdown on Cryptocurrency check out our article: Cryptocurrency – The rise, fall and future

     

    We welcome you to give our team a call to discuss your investment goals and objectives.

    You can call Walker Capital Australia on +61 2 8076 2210, and we’ll see how we can help you achieve your investment goals.