Cryptocurrencies are usually considered as an asset class instead of a currency. The governments of various countries have suggested that they want to treat them as assets as well. But all asset classes require a lot of investors to develop a robust ecosystem like crypto-code.live.
One of the major challenges that exist for cryptocurrency entrepreneurs presently is winning the trust of investors. It is ironic for an industry that exists because of blockchain, which is also called a system that is not worth trusting.
Regulation in this industry is much needed. When people pay money, they expect immediate fulfilment in the case of an online cab, food, or cab service. But in the case of cryptocurrencies, people are invested for a longer period. Hence, a system is needed that will give the investors the confidence that they will get their money back when they leave the market demand. The truth is that investors lack this confidence nowadays.
Trust between the parties who are engaging is necessary for an economic transaction to take place. People trust banks because they are acknowledged and regulated by the central banks, and they believe that their rights will be protected by the central banks.
Blockchain has lessened the trust needed from a solitary contributor in the system. They execute this by dividing trust between distinctive contributors in the system through a distributed ledger to authenticate the transaction. The contributors who authenticate the transactions have incentives to coordinate with the regulations defined by the process.
It works specifically when Bitcoin or any other cryptocurrency is used as a currency as the system removes the role of a bank by adding a regulator. But when cryptocurrencies are considered as an asset class, it is an entirely different case.
If an investor invests their money in share markets or debt papers, it is because they believe that their interests will be protected because of the regulations that exist. But in the case of cryptocurrencies, there are no such regulations. It is why the central banks and the other officials of the government have given regular warnings to invest in cryptocurrencies at their own risk.
Things cannot be expected to change in a technology that is so ingenious and innovative. It deals with two features, namely, the internet being greatly misunderstood and the financial ecosystem being extremely regulated. Governments and authorities cannot be expected to accept it when these two are combined.
Therefore, these cryptocurrency entrepreneurs also look forward to having regulations now in place to protect the interests of the investors. They have understood that the only way forward is not fighting the system but being a part of it.
After realising this, the cryptocurrency entrepreneurs agree that the industry has fewer problems to deal with nowadays when compared to a few years back. Moreover, instead of putting an outright ban on cryptocurrencies, the governments are showing some readiness to accept them.
People also claim that the situation of cryptocurrencies will be similar to the internet. Like only parts of the internet are regulated and not the entire internet, similar will be the case for cryptocurrencies.
Blockchain technology works based on predestined working and resulting certainty, which is authorised by their dependence on mathematical characteristics of hash functions and public-private key cryptography and the social and economic conditions of the related theoretical mechanisms. The discerned industrialisation and equitability intrinsic in the protocol of a network based on blockchain, hence, becomes a new starting point of confidence that emerges in various fields of endeavour.
Each network that is based on blockchain technology is a composite system comprising various distinctive constituents that interrelate with each other to secure the operations of the entire system. Thus, even if no centralised trusted authority is backing it, people need to believe and understand that the blockchain network will operate as expected. Initially, a system based on blockchain may seem to operate in a predestined and complete way, unaccompanied by the impact of third parties. But the truth is that these networks are hybrid systems composed of both technical and social constituents. But again, there is still a risk, and investors need to be aware and well-informed about all the involved risks.
Want more news from the Tech world for Gaming Peripherals to Hardware Click Here