Institutional Interest in Cryptocurrencies Rubber-stamps the Industry’s Long-Term Viability
It is somewhat uncanny just how quickly market sentiment can change in the cryptocurrency arena. In fact, since Bitcoin and its altcoin counterparts reached all-time high market capitalizations towards the close of 2017, it’s been pretty woeful.
Nevertheless, things have once again taken a turn for the good, with an all-round sentiment of positivity bringing the industry back to life. However, it is important to note that while cryptocurrencies still have a long way to go to get back to the kind of pricing levels that we saw during the crypto bull-run of late 2017, much is going on behind the scenes.
Most specifically, institutional interest is the cryptocurrency and blockchain technology arena is now a real thing. With large, established and trusted organizations now entering in their droves, this will ultimately have the desired effect of motivating the retail investor space to follow suit.
Institutions that cater for the entire crypto ecosystem
One of the most refreshing aspects to the ever-growing interest levels being displayed from large-scale institutions is that virtually every sector is covered. Whether its financial powerhouses like JPMorgan Chase, hallmark retailers like Overstock, or social media giant Facebook - institutional interest is as broad as it has ever been.
However, one of the most beneficial outcomes that institutional interest brings to the cryptocurrency industry is for those looking to enter the space at a consumer level. After all, if the blockchain asset arena is to reach its ultimate goal of global adoption, the barriers of entry need to be reduced by some distance.
On the one hand, there are a plethora of third-party exchanges that now allow you to purchase cryptocurrencies with everyday payment methods. Although this is great for the average consumer looking to enter the market for the first time, the cryptocurrency exchange industry is not only a largely unregulated space, but it is led by crypto-centric organizations that in most cases, are barely a few years old.
Everyday consumers are crucial for global adoption
It could be argued that this is holding the cryptocurrency industry back, not least because everyday consumers are unwilling to use exchange platforms that they do not know, recognize and most importantly - trust. As such, institutional involvement is this particular segment of the cryptocurrency space is crucial.
One such example of this was the 2018 crypto-industry entrance of UK-based money transfer company Skrill. Launched close to two decades ago and authorized as an electronic money transfer business by the UK’s Financial Conduct Authority - Skrill recognized that everyday consumers needed a trusted and seamless way to buy and sell cryptocurrencies at the click of a button. As such, the platform enables cryptocurrency investors of all sizes to purchase coins with popular payment methods such as a debit/credit card or bank transfer.
In a recent interview with Bitcoinist, Skrill CEO Lorenzo Pellegrino expressed his bullish viewpoints on the cryptocurrency industry, not least because of the huge wave of institutional interest now being seen. Pellegrino noted that “banks, social media companies, and governments – they’re all looking into crypto in a serious way. I’ve only seen this accelerate.”
When asked about the relationship that cryptocurrencies will eventually have with the wider, traditional global economy, Pellegrino recognizes that while large-scale disruption is a real possibility, the industry is still in its infancy. Pellegrino added that “this change will not be immediate, and, in my mind, will not happen in the short term either.”
Investors need to be patient
As exciting as institutional involvement in the cryptocurrency arena is, it is important to have a broader perspective on the long-term growth of the industry. In other words, cryptocurrencies are still just a little over 10 years old. In fact, it arguably wasn’t until the bull-run of 2017 that brought Bitcoin and other cryptocurrencies into the light of mainstream awareness.
As such, investors need to be patient. This became highly apparent just a couple of months ago when social media giant Facebook announced its plans to launch its own cryptocurrency. Known as project Libra, the announcement was met with almost-instant scrutiny from governments and regulators worldwide.
This included an open letter from the U.S. House Committee on Financial Services Democrats, with the organization expressing their concerns on Libra’s ability to protect privacy, money laundering abuse, and even national security.
The long-term future of cryptocurrency looks bright
Ultimately, even the strongest of cryptocurrency sceptics will find it difficult to present a reasonable case against the long-term viability of cryptocurrencies and blockchain technology. While it remains to be seen just how long it will take for the industry to regain and surpass its prior all-time highs, the involvement of major institutions shows us that global adoption is now a matter of when, not if.
Whether it's the likes of Skrill providing a trusted gateway to enter the market for the first time, or major US companies such as Overstock and AT&T accepting cryptocurrencies as a payment option alongside conventional debit/credit cards - institutional involvement has brought with it the much needed credibility and legitimacy the industry has been craving.
Photo via Pixabay.