Friendly tools for financial services were popular during the first quarter, and developers will continue building ways to interact easily with the blockchain
Jhonnatan Morales, a fund manager and independent consultant, summarizes the institutional adoption of crypto assets during the first quarter of 2019.
Bitcoin (BTC) has fallen by 70% this year, after reaching an All Time High (ATH) of around US $20,000 in December 2017. Currently, this crypto asset has a market capitalization of about US $91 billion, with a deal volume of US $5 billion, which positions it at the top of the BraveNewCoin market capitalization table.
Closing the first quarter (Q1), the topics are adoption and investment channels for institutions, with the purpose of creating a much more stable, safe and regulated market. It is essential to have a reliable ecosystem for the sustained growth of the crypto space.
Proposals to Simplify Operations
Currently, proposals aimed at building friendlier tools for financial service are becoming increasingly recurrent in the industry. For instance, Fidelity Digital Assets and the Bakkt group launched, respectively, an institutional custody service for private clients and a subsidiary of Intercontinental Exchange that will allow the listing of future Bitcoin with a physical settlement.
The tendency is to develop products or mechanisms that simplify joining the crypto market under regulatory parameters. The recent integration of Bitcoin Liquid Index (BLX) and Ethereum Liquid Index (ELX) to Nasdaq, and a clearer legislation regarding STOs, indicate that traders will be playing in a cleaner field.
It will be very hard to create all the channels for institutional actors to acquire the adequate infrastructure for their operations as they comply with all regulations. For that reason, many companies and organizations have taken advantage of the so-called crypto-winter to focus on developing such mechanisms.
Wall Street operators expect more clarity on other aspects before investing in crypto assets, but many solutions already proposed by crypto bags, data providers and high-end financial institutions are aimed at meeting those needs.
Regarding adoption, actions are increasingly immediate and intense as countries begin to be outlined in their crypto legislations. Binance’s statements on acquiring Bitcoin with cash in more than 1,300 points around Australia, as well as the opening of payment systems in cryptocurrencies, are undoubtedly strategies for the access of products by unbanked people from unattended markets.
Effects on Efficiency and Security
On the other hand, the boom in second-layer solutions within Bitcoin, such as the Lightning network (LN), has been gaining ground since its activation in 2018. It has gone from about 15,000 channels in operation to more than 36,000 in the first quarter of the year (an increase of 130%), with a volume of 1,000 BTC (46% more than last month), and a transaction size limited to 0.04 satoshis, whilst the network develops and builds.
Projects like Ln.pizza, which offers US users an instant purchase at Domino’s Pizza with a 5% discount by using the Lightning Network (LN) and Tippin.Me, a tip service on Twitter that allows users to send micro-transactions very easily, are among the many cases that seek to capture users’ attention through cheaper and faster transactions.
Programmers’ constant work has led big companies and respected personalities in the field of technology to put Bitcoin in the spotlight. Jack Dorsey, CEO of Twitter, and Facebook employees consider that blockchain technology can simplify current processes, simplifying value transfer, data security, and interaction with faster payment systems.
Incidence on Financial Market
Wall Street is increasingly hosting the crypto world to create channels more suitable for large capital. The integration of Bitcoin indexes to Nasdaq and Fidelity leads to a more stable and safe market in the medium term, but this will not be enough for other institutions. Bitcoin trading on the US stock exchange seems distant, as this market is still young and lacks enough trade surveillance to meet the needs of the Securities and Exchange Commission (SEC).
Future progress with these initiatives could trigger a bullish rebound and favor institutional investments within the ecosystem. However, these issues will not keep developers and the crypto community from advancing and building new ways for users to interact with the blockchain through tools that simplify processes.
In contrast, whilst the current value of Bitcoin and most assets has plummeted, the options for buying, selling or storing have expanded, the rates are the lowest since 2016, trading volumes in Bitcoin continue increasing, and transactions are about to reach their highest point.
By Willmen Blanco