Digital currencies/assets like Bitcoin are a little over 10 years old and growing in popularity, but still haven’t achieved mainstream acceptance.
This has a lot to do with low levels of trust, driven by concerns that the majority of cryptocurrencies have no intrinsic value, aren’t backed by governments, and aren’t secure.
Now that more regulated financial institutions and governments are coming on board, levels of trust may just begin to rise - particularly with Bitcoin and Ether.
Blockstation is working to advance that trust with its secure, end-to-end trading platform designed to work with regulated financial institutions to protect investors worldwide.
By: Marko M. Hafez, President
Decentralized digital assets like Bitcoin and Ether are now a little over 10 years old, and they are more popular than ever. A 2018 study from Cambridge University showed that there are as many as 35 million identity-verified users worldwide, but the number is still low compared to how many people use fiat currencies.
In other words, Bitcoin, Ether, and similar tokens aren’t yet mainstream, for reasons that have a lot to do with trust. They just don’t have enough of it yet.
But maybe they should?
As more regulated financial institutions and governments take steps to accept them, it’s worth looking at why trust is low and how the world of blockchain-based digital assets is adapting.
If you’re one of those people who are interested in digital assets but waiting for a safe place to start trading, consider creating an account with Blockstation. Our platform is secure and approved by financial regulators, and it offers 100% insurance on your Bitcoin and Ether.
In Bitcoin we (increasingly) trust
When I look at why major financial institutions and retail investors have been slow to trust this innovative asset class, it mostly comes down to three areas:
This one is easy to understand. Pretty much everything that’s ever been used as money has some other use: gold is a precious metal, certain beads are rare and beautiful. Even paper bills can be used as paper if really needed. On the other hand, Bitcoin, Ether other digital coins are just code in a database.
One of the things about money is that above all, its value comes from trust. The most powerful economies in the world abandoned the gold standard decades ago, meaning those paper bills in your wallet are valuable because everyone agrees they are valuable.
There are at least 35 million people in the world willing to exchange government-issued currency for Bitcoin and Ether - they trust that these coins have value. And these assets have proven to be the a fast, secure, transparent, and extremely cost-effective way to send that value anywhere in the world. Every new user who comes on board strengthens that trust for other investors over time.
While Bitcoin and Ether aren’t issued or controlled by any government, they and other coins are increasingly permitted and trusted by governments. For instance:
Barbados accepts tax payments in USDT
The Jamaica Stock Exchange has piloted the exchange of Bitcoin and Ether since November 2018 within the regulatory framework of the Financial Services Commission of Jamaica
Financial regulators in America (the SEC) and Canada (IIROC) are actively studying regulatory frameworks for digital assets
Government-regulated financial institutions like Fidelity Investments and the Continental Stock Exchange are embracing digital assets for investors at the institutional and retail levels
Plus the fact that multiple governments have considered issuing their own sovereign digital asset/cryptocurrency makes the general concept that much more credible.
It comes down to this: do you trust banks, investment brokers and stock exchanges with your money today? With more regulatory approval, you’ll be able to trust those same institutions with digital assets as well, making your investments in Bitcoin, Ether and tokenized stocks a normal part of everyday life.
Last, everybody has heard about horror stories like the Mt. Gox hack and the collapse of Quadriga CX. Not great for trust.
What’s important to remember is that those disasters happened partly because there was no regulatory oversight. No licensed financial institution would be allowed to operate the way Quadriga did, and insurance is often available to reimburse investors in case their regulated assets are stolen.
As governments and financial institutions come into play, the actual level of risk lowers and management of private keys can be safely delegated to third parties (as we trust banks to store our money today), the “digital asset marketplace” will be normalized. People will look at it as just “the marketplace” where everyone goes to do business.
Can Bitcoin and Ether become trusted digital securities?
There are a lot of good reasons why the majority of people haven’t given their trust to digital assets so far, but there’s even more reason to expect that trust levels - and overall adoption - will rise in the years to come.
At Blockstation, we’re proud of our role in growing that trust around the world, starting with our historic partnership with the Jamaica Stock Exchange (JSE). Named Bloomberg Businessweek’s top-performing stock exchange in 2015 and 2018, the JSE is now accepting investors to make history and trade regulated, 100% insured Bitcoin and Ether through the Blockstation platform.
What do you think - are digital assets ready for mainstream investors? Let us know on social media and be sure to tag #Blockstation!