Cryptocurrency Exchange Expectation Vs Reality

May 28, 2020 - 4 min read

Furthermore, higher volumes during a cryptocurrency exchange are an indication that many users consider it to be trustworthy. At the same time, the trading volumes help users to get an idea of the buying and selling activities in a cryptocurrency and to determine the direction in which the price could go. A high volume cryptocurrency exchange offers many advantages to users who want to deal with digital currencies.

Another important factor behind the rise in cryptocurrency prices is that early investors speculate that cryptocurrency protocols like Bitcoin and Ethereum will be of greater value in the future as more use cases and supporting technologies are developed. Currently, total cryptocurrency market cap is just a small part of other valuable markets like gold, real estate, or global stocks. If cryptocurrencies as a market can capture liquidity like some of these other valuable markets, the total value of the cryptocurrency market could increase dramatically over time.

If you speculate that the price of a certain cryptocurrency will rise after the continuous price increase, the prices for cryptocurrencies will rise. Sometimes government or regulatory support for cryptocurrencies can positively affect prices, while in other cases regulatory ambiguity negatively affects price movements of cryptocurrencies. Security hacks: Security breaches on cryptocurrency exchanges, wallets and other areas lead to negative market sentiment.

New cryptocurrencies: In the early years, Bitcoin was the only competitive cryptocurrency on the market. Mining Difficulty: Most cryptocurrency protocols rely on the mining process to create and secure the coins that are part of their network. Over time, the calculation behind the mining becomes more difficult, which increases both network security and the shortage of the associated cryptocurrency.

The value of coins fluctuates because expectations about demand are influenced by a variety of factors. Examples of these factors are: No third party has to intervene to stabilize the value. New cryptocurrency or the disappearance of the cryptocurrency can affect the price of other currencies, and cryptocurrency customers are diverse. The demand for a specific cryptocurrency can increase because customers can use cryptocurrency not only for lawful transactions, but also for tax evasion, money laundering, extortion, prostitution, human trafficking, speculation and drug and weapon trafficking (Gruber 2013 Gruber, Sarah).

In which a person with a private cryptocurrency store transfers cryptocurrency to another person with a private cryptocurrency store in which no regulated institution is involved. The fact that such transactions could take place without the involvement of institutions would mean that the authorities would not be able to fully enforce the transaction ability restrictions as recommended by the FATF (Financial Action Task Force, 2018). Regardless of whether such arguments are valid or not, cryptocurrencies can become a dominant form of value exchange, precisely because people value data protection. In this case, regulators only need to support cryptocurrency transactions because these are the transactions that are taking place.

Nevertheless, many cryptocurrency exchanges, banks and other financial institutions have not understood that the rule for bsa funds also applies to virtual assets In May 2019, the FinCEN money service company (MSBs) made it clear that it would strictly enforce the BSA rule in relation to cryptocurrency transactions in the future. In a keynote speech at the Cryptocurrency Travel Rule Compliance Conference on November 5, 2019 in San Francisco, California, FinCEN Cyber and Emerging Tech Policy Specialist, Carol House, went beyond the clarification released in May.

The travel rule represents a significant change in the regulatory requirements for virtual asset service providers and is causing companies to rethink the management of cryptocurrency transactions and identity information. The exchange of cryptocurrencies is required to share sender and recipient information, similar to bank transfers or SWIFT messages. The development of a functional solution requires major technological innovations such as cryptographically controlled methods to securely pass on this information. Such compliance to improve data protection would only disclose personal data if required by law enforcement agencies.

Unlike traditional money transfer services, cryptocurrencies work more like digital cash, and final settlement is done in minutes, which is a massive financial innovation. Instead of a complex and proprietary transaction completion infrastructure, everyone has to send and receive cryptocurrencies.This is a smart device and an internet connection. Ownership Unauthorized cryptocurrencies do not belong to and are not controlled by any company or government, although the use of cryptocurrencies is regulated in certain countries.