Many people have already speculated that perhaps the end of the year will bring a significant decline in the value of Cryptocurrency. In fact, in the aftermath of the Cyprus break-up, some individuals have purchased large quantities of virtual real estate “putting them up for sale.” However, the European Central Bank has taken steps to support the value of Eurozone currencies by making it easier for people to withdraw cash from their bank accounts. In addition, a key member of the Cyprus government has stated that Cyprus will not be changing the existing Eurospeaks that will ensure the tax-free status of certain economic sectors within the country. Therefore, for the time being at least, investors have had some reassurance when it comes to the potential for a major decline in the value of Cryptocurrencies in the near future.
There are a number of factors that may lead to the potential for a decline in the price of Coins. These include (but are not exclusive to) the current political and economic situation in Cyprus, the degree of global uncertainty, and the impact of the recent Cyprus crisis on global confidence in the strength of Cryptocurrencies as a store of value. The fact that the Cyprus crisis has temporarily diminished the liquidity of Euros, particularly the Euro FX, can help explain why some people have expressed concerns about the health of their investment in Cryptocurrects. While the potential for a decline in the value of Coins remains remote, investors should continue to hold onto their own, even as market sentiment sours. Conversely, there is also the risk that Cryptocurrencies will gain rapid momentum, leading to increased volatility in the marketplace. This increase in perceived risk could lead to greater losses for traders in other areas of the market.
Some current concerns about the market include a decrease in the functionality of the XBV, a move that could result in an acceleration of its decline. The main concern cited by industry experts relates to the increase in the rate of decline for Digital Financial Instruments such as the XBV, which could lead to severe limiting of their participation in the Forex market. Other Digital Financial Instruments facing potential decline includes the Euro FX, which could see a reduction in its use as a global currency. It is expected that more intermediaries may soon adopt Digital Cash into their lending portfolio. This would create a scenario in which Digital Currencies could replace the use of traditional interbank brokerages.
An increasing number of cryptographers believe that the next step for blockchains to realize the potential that they possess for finance and trade. They are making the case that it is not sufficient for a new breed of digitally-based asset exchange to rely on the capabilities of the existing XBV and EUREX. They believe that futureblockchain technologies will be able to take advantage of improvements in the speed and efficiency of transaction processing. There is also much talk that several big-name companies, including JP Morgan Chase and Morgan Stanley, will begin experimenting with the distributed ledger technology. A number of high profile venture capitalists have taken an interest in the emerging ecosystem of cryptocurrencies.
An innovative idea being tested by a number of financial institutions is a distributed ledger technology, referred to as a permissionless distributed ledger. This is different from the existing centralized and secured financial system in that it does not require any physical assets to be stored or secure. Distributed ledger technology will allow users to transact directly between each other. No third party will be needed in this case. This could revolutionize the way we do business, since traditional banks will be forced to either partner with a new technology company or face intense pressure from their shareholders to do so.
Another use of decentralized finance is through the invention of off-chain digital cash systems. These systems are designed to remove any possible middlemen in the transaction process. By removing the third party, users will be able to reduce fees and other charges associated with their current financial transactions. Off-chain distributed ledger technology also increases overall security for financial transactions, since no data is actually stored on the public Internet. This ensures that users are safe from hackers who may misuse personal information and data.
The last application of decentralized finance is through off-chain/peer-to-peer lending. This type of service allows users to get access to finance at a lower interest rate through a P2P lending system. Although the interest rate is generally less than the average market, the savings to the borrower are still significant. In some cases, these lenders even offer free money to their clients.
Even though there are many uses for off-chain/peer-to-peer lending, the two most popular ones are Bitdefender and Prosper. Both companies allow their customers to deposit funds into accounts with them. The key difference here is that Prosper works only with actual credit cards while Bitdefender works with both debit and credit cards. With these types of services, a customer sends a payment to their chosen lender, and the provider then sends the payment to the credit card or bank of the client. From there, the funds from the loan are transferred to the account of the client. This is how off-chain and decentralized finance works.
