Freedom to fail and succeed: You can't have one without the other
Uncertainty with regulation in the cryptocurrency market is stifling innovation, growth, and adoption.
A free market is one that allows not only great success, but great failure. Herein lies the problem with the cryptocurrency industry. It is an industry that by its own nature is inherently volatile and risky, especially now as it is a relatively small market and is subject to large swings in value and volume, unlike much more established markets.
A bad investment in cryptocurrency is a whole other level of hurt compared to a bad one in the stock market, for example. It's not unusual for certain currencies, or even for the entire crypto market as a whole, to drop 10% in value on a given day in crypto. This would be devastating on the stock market because of the scale of the market in comparison. The crypto market, in its entirety, holds a market capitalisation of less than half a billion dollars. The world's stock markets? Somewhere nearing $100 trillion. Yeah. That's a whole lot bigger. 10% of 100 trillion dollars would be a serious global meltdown.
Whereas the stock market has experienced decades of growth to become established and broadly liquid around the world, the crypto market is infantile in comparison. Keep in mind, however, that if you simply compress the movements of the stock market down into a shorter time frame, they start to look an awful lot like the crypto market. It's as if the crypto market is simply moving in ultra fast-motion in comparison, but other than that, the patterns are strikingly similar.
Knowing these factors, it becomes easier to understand why the market is capable of moving up and down such massive percentages in such short time. And it is because of this rapid movement that the crypto market appears dangerous - too risky for institutional investment, supposedly. By the time a signal is known to the public in the cryptocurrency market, it's usually too late to jump in without risking riding red candles back down to previous dips. This makes it much tougher to time and to react to the market with any kind of success in short time spans.
This will take some adjustment as crypto grows in popularity and acceptance. But regulation that is meant to fit the world of slow-motion stocks simply will not cut it in this world. Economic uncertainty that can slow stocks is exponentially more detrimental in the hyperactive movement of crypto.
What regulators looking at cryptocurrency need to realize is this: this is a different world. The same rules and regulations of the old economy will not work in this space. Companies and their investors must be allowed to innovate and flourish, or flounder and fail. The wheat will be separated from the chaff in short order if allowed to do so. And it won't take decades to sort things out like it does in the stock market.
A global free market approach is the best way to allow this new economy to grow up for the broadest benefits to the most people.
*This is not professional trading advice - it's just my opinion!
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image source:
https://cei.org/content/model-rolling-back-outdated-regulations
A global free market...sounds so wonderful, and I couldn't agree more. The problem is we have so many entrenched big-money interests that absolutely DESPISE anything they can't control...like the emerging crypto markets. Still, I can't help but feel like it's the 40s and we are in on the ground floor of the plastics revolution or the 90s, and we are in on the ground floor of the emerging internet-based sector. Of course, there will be losers in the crypto universe, just as there are in any emerging business mileu, but I truly believe Steemit (if we can hardfork out the warts) has a much better than even chance of being on the winning side.
I think there is a strong delimitation to be made between crypto-currency and tokens. Crypto-currency isn't a business, the rules of former technological explosions don't absolutely apply. You don't need a lot of capital to launch a new currency, you just tweak the parameters if an existing one and see what happens.
That is where I think things are going wrong, ICOs are businesses and they are raising capital to build centralised tokens (a business is inherently centralised). It's in this space that perhaps older paradigms are closer, but the problem with ICOs is you don't own a share in the business, you own a token which you could exchange for time on a working product, if it ever occurs. The point is we are seeing more out-and-out scams in this space, which is driving the desire for regulation. ERC20 is the worst thing that happened in crypto space.
Lots of wisdom in what you say. I think Steemit is much more than just another token, however, and that the platform (once it becomes less top-heavy, more egalitarian and cleans up all the bots, scams and spam) is truly unique enough to perhaps make its growth midway between linear and exponential.
Sure wasnt referring to Steemit, it has its own block-chain and a real world use, its a currency, not a token.
Yup Steemit is a whole other ball of wax.
Thanks @mepatriot. I think any attempts to control the rapid movement of the crypto world will hinder positive growth more than anything else. It is in the nature of crypto to grow despite restriction, but the growth can benefit more people if it's welcomed instead of suppressed.
I couldn't agree more. Still, I fear the current super elites may yet decide to crack down on the whole crypto space, even up to and including shutting down the internet, in a desperate attempt to maintain their up-til-now stranglehold on money creation. I hope I am wrong...of course...
Even shutting off the internet won't stop it. It's possible to send currencies with SMS if necessary.
And I really find it unlikely that the entire internet and SMS networks could be shut down in most of the world, anyway. Maybe in some heavily controlled places...
To me it's more likely that they may try gaining so much hashing power so as to render a network like Bitcoin under their control, essentially. But then one could turn to many of a number of other currencies, if necessary. They're better off just buying in and manipulating it like whales do (that's assuming they're not already doing so).
I agree that is the most likely scenario.
Resteemed your article. This article was resteemed because you are part of the New Steemians project. You can learn more about it here: https://steemit.com/introduceyourself/@gaman/new-steemians-project-launch