An average daily market trading volume exceeds $3.5 trillion, and the total market cap stands at more than $1.5 trillion, despite the fact the market being less than a decade old!
Most of the famous crypto-exchange platforms cannot afford to keep the “account opening” feature available all the time, because of how great the surplus load is.
So what is bad with Crypto..?
Despite all the gargantuan numbers and success by masses, there is a chain of major problems, that plague the market. Using the capitalization talking point is a false narrative, because of structural and functional issues, that influence the market of crypto. These problems alone stem greatly thanking the childish nature of many brokers, raw understanding of the market and cryptocurrency space, and other peculiar details of crypto.
The following list is some major obstacles market has yet to overcome:
– the Price Manipulation
First of all, we would like to mention the biggest issue on the crypto-market, and that is — volatility.
The prices on exchange platforms rise and fall no matter what, and their amplitude is enormous. Certain assets, via special manipulations, can gain or lose as much as 10000% of the value, which stakes the volatility on a critically high note.
Moreover, there are a certain type of people, which on the market are referred to as “whales”. Whales, are individuals, who bear a grand amount of money in cryptocurrency holdings. They are able to swing market by manipulating the prices, creating “Buy/Sell Walls”.
“Buy/Sell Wall” — simply put, when a buy or a sell offer, worth of million dollars is put onto a trading platform. Regular investors, who trade by smaller amount of money are always to catch the signal, and interpret it as a mean of an immediate price increase.
Once the wall happens, the price will inevitably go up, which can bring even larger dividends to a whale, and leave other investors by the back. And to add up, the whales can drive up the price without actual investing, meaning, that no money were put in the market to stimulate it.
The biggest reason why this sort of asset price manipulation is possible, is due to the lack of position price limits/fees on many cryptocurrency trading platforms. If adequate limits or fees are put in place, it will discourage the movement of large buy and sell market positions.
– no Price Uniformity
Price charting is essential to every financial institution there is. But with the crypto-market, situation might be out of control. Price difference, when converting to fiat is overwhelming, and cannot be traced back to the cheapest or the most expensive platform as Poloniex, Binance, or Shapeshift.
It is absolutely necessary to build up universal charts with a generalized index of value for every major cryptocurrency, as it can regulate and dictate rules of pricing to every exchange fields.
– the Cybercrime
The cryptocurrency market was always a sweet offer for the hackers and cybercriminals. For all the times of the market, there have been numerous high-profile heists and hacks, that resulted in millions of dollars being stolen from owners, or the blockchain itself. Some trading platforms were shut down, while other cryptocurrencies have significantly dropped in value.
As a counter bid, traders and platform operators have taken measures to overthrow nowaday hackers from their pedestals, and make it more secure to trade.
While some of these measures are indeed helpful, they create bottlenecks that hamper the cryptocurrency trading process. This then creates a trade-off between security and efficiency. Take for instance, the need to provide adequate security for cryptocurrency held in wallet storage. Due to the activities of hackers, some traders prefer to store the bulk of their cryptocurrency holdings in offline wallets.
The transaction on Blockchain cannot be muted, and if the funds get somehow traced and stolen, there is a little what you will be able to do about it. Crypto-exchanges have to constantly improve their security frameworks, to stay safe from thieves and hackers, which can result in other inconveniences for the user.
– the Pump+Dump Plague
We have already mentioned “whales”, and how they are ruining the market for everybody except them.
But, there are also a more sophisticated way to steal money from others, and that is — pumping.
How does it work? Many tokens are introduced to the market via ICOs with investors buying these tokens in exchange for fiat money. During the ICO, the entrepreneurs behind the token speculate massively on the coin, driving the prices up and getting investors attracted. Once this is done, they cash out, leaving the investors with worthless coins that have little or no value.
Pump and dump ICO schemes continue to be a problem for the market due to the lack of regulation of the market, leaving it with millions of dollars in losses, which can attract state forces, and police investigation to the game.
– the Conclusion
While cryptomarket is crippled with problems, that target you with a risk of losing your funds, it is, and it will be a great choice for tech-savvy users, who feel confident enough to oversmart thieves and big figures, and trade or exalt with no issues ensued.