Even the bravest analysts are hesitant to offer predictions, because now, and without it being clear to specialists why, cryptocurrencies are suddenly increasing in price – Bitcoin is leading – and simultaneously traditional banks, which are uniting to replace SWIFT, and even popular social networks as well, are preparing to use blockchain technology in their systems.
Right now the Bitcoin issue is particularly relevant. The best known cryptocurrency is growing in value again, although many financial analysts dismissed Bitcoin after the 2017 correction. Suffice it to say that in February the Bitcoin rate dropped to 3.3 thousand dollars, and now it exceeds 8 thousand – and continues to grow. But Bitcoin isn’t the only currency increasing in price. The so-called junior cryptocurrencies, like Ethereum, have seen growth as well: in three months its price rose by 105%. And the total capitalization of the electronic money market increased by 22%. Today it amounts to about 219 billion dollars.
In search of a punching bag
Many financial world experts, who previously pulled the plug on various cryptocurrencies, are now looking for the catch: it cannot be that Bitcoin, which had been falling steadily in price, is going to set a record again! It is no coincidence that some analysts have thought that the secret is hidden in possible market manipulations by major players – both in the world of fiat money and cryptocurrencies.
Some experts are sure that the increase in the capitalization of the virtual money market is associated with a growing aggravation in relations between the US and China. Donald Trump ordered the introduction of additional tariffs on products made in China in the amount of 300 billion dollars. Almost all imports from China can fall under the restrictions, as already mentioned by US Trade Representative Robert Lighthizer.
In turn, Gaidar Gasanov, an expert from the International Financial Center company, noted that American and Chinese companies that successfully cooperate with each other will be those that suffer first. As a result, they will more confidently build their financial relations in a virtual space – and with cryptocurrencies, not with dollars.
With that, despite all the growing trends of the cryptocurrencies, in the real world the opposition to virtual money continues. The banking system and government are against Bitcoin. In China, the People’s Bank of China officially banned the ICO, as well as carrying out any trading operations with electronic currencies. Beijing intends to limit even the mining of cryptocurrencies, as reported by the country’s Central Television.
Some of the world’s leading banks are also talking about increasing pressure on cryptocurrencies. The management of JP Morgan, the largest US bank, hinted: many payment systems that work with cryptocurrencies still feed on external funding – through operations via structures like ours. In other words, representatives of traditional banks say that cryptocurrencies are still tied to real world fiat money, even to the price of gold, and depend on operations in the securities market.
The system of cryptocurrency relations is only getting stronger
But with all this, the system of cryptocurrencies and operations with them continues to evolve. Yes, nobody argues – at the moment the offers from fintech companies surpass the global demand for cryptocurrencies and operations using them. Many payment companies, opening accounts for cryptocurrencies, can only exchange the electronic money and simply store it virtually. Here the clearest example is the situation with the fintech company Revolut: it opened access to buying Bitcoin, Bitcoin Cash, Ethereum, Litecoin, XRP for standard account holders, but users soon noticed that the operations available with electronic assets are very limited.
Although such stories do exist, the positive examples occur more often. And that is why more and more inhabitants of the virtual space want to see cryptocurrencies on their current account – for investing and earning.
Speaking of investing, many individuals and legal entities are looking more and more closely at the system of trust management, where operations are carried out using electronic assets. A person has cryptocurrency savings on a current account, available money, and he decides to invest them – with profit. Therefore, on the market, some of the most advanced fintech companies offer the ability to combine a simple current account and investment.
There is also a current account system with an integrated crypto exchange. Individuals with a small amount of savings are interested in CFDs, for example, in Forex. In the Forex system the trade in cryptocurrencies can be carried out as well – by physical persons.
Blockchain is being brought to the frontline
So, little wonder that the financial sharks on Wall Street are looking more and more attentively at various advanced cryptocurrency systems. Recently, the chairman and CEO of the above-mentioned JP Morgan, Jamie Dimon, called Bitcoin a fraud, and now they are developing their own payment system, the basis of which is blockchain. The US Securities and Exchange Commission (SEC) may soon approve the creation of an investment fund that is tied not to gold or the dollar, but to Bitcoin. Another large investment company, Fidelity, has announced the creation of a depositary service for Bitcoin and other liquid cryptocurrencies.
Companies in the non-financial sector are not falling behind either. Here, the brightest example is Facebook. The social network is actively working on the Libra project: its goal is to create an online payment system based, again, on blockchain. Recently, large retail chains, such as Crateand Barrel, Nordstrom and Whole Foods, announced a partnership in which they guaranteed acceptance of Bitcoin along with fiat currencies.
Another example is the Central Bank of Thailand. They are promoting their own digital currency project, also based on blockchain. This decision was made in order to make it easier to carry out settlements on interbank transactions using digital currency among partner banks, for example, Bangkok Bank Public, Krung Thai, Standard Chartered Bank, and HSBC.
This was recently announced by the partner of the Thai bank Wipro Limited – the Indian multinational corporation providing services in the field of information technology, consulting and business processes. It is based in India, and as of this year, the company earns about 8.5 billion dollars annually. By the way, the company is developing a system that allows using cryptocurrency operations to increase the sales efficiency of government bonds in various countries.
Against SWIFT – or with it?
It is worth noting another trend. All this talk about improving programs for working with cryptocurrencies, as well as associations of banks into unions, where operations will be carried out in blockchain, are heard in tandem with the news about the need to urgently reform SWIFT – because otherwise the system will be gone, as it’s already severely outdated, according to financial analysts.
In turn, amid these talks, the news suddenly broke that 105 global technology companies, including SWIFT, IBM, Ripple, Consensys AG, had been united in the International Association for Trusted Blockchain Applications (INATBA) to promote DLT technologies within the EU.
You can read more about it in the official press release. The association will be advised by the European Commission, the World Bank, the European Investment Bank, along with other unfluential structures. Mariya Gabriel, the European Commissioner for Digital Economy and Society, said: “Such cooperation confirms that blockchain technology will become the driving force for our economy in the coming years.”
The blockchain system and everything related to cryptocurrencies are now so confidently entering the world of traditional financial relations that soon any operations with electronic currencies will be considered the norm – in spite of the opposition of certain countries and retrograde banks.