For most people, the term ‘cryptocurrency' probably brings to mind the familiar pink and white logo of Bitcoin. But beyond this one particular digital currency, there are hundreds of others that are built on blockchain technology – an increasingly popular tool in the eyes of many investors as it provides a digital version of ‘traditional' stock markets. It's a far cry from the traditional stock market which is largely closed to the general public, making it difficult for people to get in on the action unless they're specifically granted access by the management.
In a bid to give individuals the opportunity to get in on the action more easily, cryptocurrency platforms like bityx aim to make trading as accessible as possible by offering a variety of tools and information to help people learn to trade – and trade well – using cryptocurrency. In an interview with Crypto Gazette, Thomas Gerke, CEO of bityx, reveals more about the company and its plans for the future.
The Current State Of Things
Those in the know generally agree that 2019 has been a difficult year for cryptocurrencies as the overall market value of all digital coins dropped by about 99% from its peak value of US$800 billion in January to just above US$200 billion now. But while the value of Bitcoin has halved, the underlying technology remains as popular as ever.
“The biggest surprise for me was the resilience of the blockchain technology and cryptocurrencies,” Gerke says. “We've seen a lot of institutions come into the space and a lot of venture capital flow into the sector. But at this stage, it's always the money that's coming in, not going out. People are seeing the benefits of blockchain and why it shouldn't be ignored.”
Certainly, it's changed the way we do business. Many companies now deal only in cryptocurrencies, meaning that all major purchases are now made using one of the hundreds of different coins or tokens on offer. So while the price may have fallen, it's not really reflected in the value of the underlying technology. In fact, many coins have seen a rise in value this year as the market adopted a more traditional approach to valuing cryptocurrencies.
Why Bityx?
Launched in August 2018, the Frankfurt-based bityx is one of the first cryptocurrency platforms to offer a fully operational stock market that operates on a blockchain. It's also one of the only platforms that let individuals create their own stock market by using an easy-to-understand charting tool that allows them to follow the price movements of any stock, investing in the same way as big institutional investors would, direct from your phone.
The appeal of bityx is simple. For those looking to get into the market but lack the expertise, it provides a welcoming environment where they can learn without risking too much money. And for experienced traders, it offers the chance to access a traditional market and make a profit, knowing that all the orders are processed on a blockchain and all the data is available for review. In theory, at least.
The Demographics Behind The Demand
While the overall cryptocurrency market is dominated by men (71%), it's a different story when it comes to the investors on bityx . According to a survey conducted by the platform, 56% of participants identify as women. Moreover, about 78% of respondents are over the age of 35. In the eyes of the market, the Baby Boomers – those born between 1946 and 1964 – have entered the cryptocurrency scene, with about a third (32%) having invested in some form of digital currency. The survey didn't ask about the reason for investing in cryptocurrencies, but one theory behind Boomer affinity for crypto is that it provides wealth preservation and a hedging opportunity, two themes that are near and dear to many Boomer consumers' hearts.
Blockchain For All
Bittyx isn't the only company with blockchain-based projects. In fact, the industry is brimming with them, from the well-known Bitcoin to the lesser-known Litecoin and Ethereum. So while the market for cryptocurrencies has dwindled, the technology behind it hasn't.
The advantage of blockchain is that it is a ‘distributed memory system' that is highly resistant to hacking. Essentially, this means that data is stored and archived across a network of computers rather than on one central server. This network is constantly monitoring the data, ensuring that no one outsider has access to all your personal information. It also provides a degree of anonymity, protecting your privacy and allowing you to conduct business without having to worry about your personal data being compromised.
The Role Of Financial Regulators
Even though cryptocurrency as a concept is fairly new, the underlying technology and rules that govern it aren't. This is one reason why most major financial regulators have taken a relatively hands-off approach to governing the industry. After all, it isn't as if cryptocurrency trading platforms aren't already regulated by the financial watchdog the CFTC, the US Securities and Exchange Commission (SEC) or the Financial Action Task Force (FATF).
But while the overall cryptocurrency market is still relatively unregulated, all major stock markets are heavily monitored by government agencies that have the power to shut down any illicit activities within them.
What Lies Ahead
Despite a difficult year, which according to Gerke, was only a blip on the horizon, he remains optimistic about the future of cryptocurrencies and blockchain technology. In fact, he sees the industry expanding rapidly in the coming years, with more and more people seeking to get in on the action and profit, regardless of their experience with finance.
“I think we've hit on something that's going to be valuable for decades to come,” he says. “There's just so much demand for this service and this product that we offer that even more people are going to be looking for ways to get in the market. The technology is evolving and changing the game, providing people with cheaper and more efficient ways to conduct transactions.”
Perhaps it's time for the big banks to get out of the way and allow smaller financial institutions to flourish. After all, as long as there's a demand for financial services, somebody is going to supply them. Or, at least, the opportunity is.