What a Future Proof Cryptocurrency Exchange Looks Like
It’s a common refrain: Cryptocurrency is the future of finance. Many enthusiasts have been bullish on Bitcoin and other cryptocurrencies since their inception. But what about the recent price fluctuations and the fact that the media has claimed Bitcoin is dead more than 450 times? Beyond speculation, there are reasons why cryptocurrencies have gone up or down in price. One of those reasons is cryptocurrency exchanges have failed spectacularly in providing adequate support to their clients when they needed it the most.
There are several recent stages of cryptocurrency growth and evolution including:
- Pre Downturn
- Post Downturn
- Future of Cryptocurrency Exchanges
Answering the question “what does a future-proof cryptocurrency exchange look like” is vital to understanding where exchanges have failed in the past and what can be done in the future to build confidence and trust.
Pre Cryptocurrency Downturn
Prior to November 2021, crypto users had enjoyed a long period of significant growth which lasted more than a year, bringing the price of a Bitcoin from $10,000 to over $65,000. Buyers viewed exchanges as totally safe and secure and were willing to use them despite their lack of client support that is expected from traditional financial institutions.
With prices booming and short-term investors flooding into the crypto market, individuals ignored the fact that cryptocurrency exchanges simply did not offer any reliable client support or the ability to talk to a human. While crypto’s short history has shown a trend towards expansion and contraction, first-time investors piled into new coins which are historically more risky and volatile hoping to find the next big project.
While there are other reasons crypto prices increased, the main driving factor is new investors searching for profits that others had recently gained. But as with all crypto bull runs so far, the end came and cut rapidly into the significant gains many individuals had enjoyed in 2021.
Post Cryptocurrency Downtown
While there are many reasons the cryptocurrency bull run ended, here are 5 driving factors.
- Economic Instability
The financial markets and the price of Bitcoin are still closely related despite the decentralized nature of the blockchain. Economic instability has rippled through the world economy over the last two+ years. From supply chain issues, rising costs, tough labor markets, and rapid inflation, many “fly by night” crypto exchanges have shut their doors, gone bankrupt, or had to reduce interest rates paid on crypto staked on their various platforms.
China’s ban on crypto mining in 2021 also negatively affected the price of Bitcoin. This ban is still in effect however underground crypto-mining operations still exist in China.
- Rising Interest Rates
The Federal Reserve raised interest rates by half a percentage point in May of 2022, which strained the financial and cryptocurrency markets and it took just 8 days for Bitcoin to drop 27%. Interest rates have continued to rise as the US government struggles to rein in rapid inflation including a 0.75% point increase in late September 2022.
- Expected Cryptocurrency Regulation
Regulation in the crypto space is generally not a bad thing for crypto buyers. In fact, legitimate exchanges are generally very receptive to regulations that increase the safety of their client’s funds. When the FDIC insurance was set up after the Great Depression in 1933, it created a level of confidence in a system that had largely collapsed a few years earlier. Cryptocurrency scams have also been largely to blame for more than a billions dollar of lost or stolen coins according to a report by the Federal Trade Commission from January 2021 to June 2022.
- Mismanaged Cryptocurrency Platforms and Exchanges
Infamously, in June of 2022, the crypto lender Celsius Network halted withdrawals citing the “domino effect” of the collapse of the stablecoin “Terra LUNA.” Celsius Network later filed for bankruptcy with billions of dollars still owed to its clients. It’s instances like this that cause non-users and enthusiasts alike to be wary about what tech they invest in and how they store their hard-earned cash. And all the more reason why 24/7 client support should be a client’s number one priority when choosing a platform to purchase cryptocurrency through.
Why was the collapse of Terra LUNA such a blow to the whole crypto market? Primarily it is because stakeholders assumed cryptos pegged to the dollar (meaning 1 coin = 1 dollar) was a safe way to store their cash. The de-pegging of LUNA was a huge blow to the confidence of its investors because this was assumed to be totally safe.
If you are wondering what caused the depeg of this once-popular coin, you are not alone. While there is too much information to write here, the two main reasons are general investor panic and failure of the mechanism that paid out interest to owners.
This depeg also had a large negative effect on all crypto buyers and was a factor in short-term owners taking their money out of exchanges or holding their metaphorical “cards” close to their chests as they watched the disaster unfold. To prevent crashes like this in the future, it is critically important that exchanges audit each coin they allow to be listed on their exchange, and clients have a complete understanding of how the mechanism surrounding each coin works.
Other crypto exchanges have been known to limit withdrawals, unexpectedly close accounts, or suspend trading. These tactics are nothing short of highway robbery and this practice should generally be condemned, especially without client transparency and good reason.
- Cryptocurrency Customer Support
Lack of client support has crippled many crypto exchanges and has left users feeling that, even if they do have a question or concern there is no easy way to reach a human on the phone, chat or email in a reasonable amount of time. If you read more than a few Tweets or articles on crypto, the gap between the services clients want and need and what they receive is astronomical. And since cryptocurrency can be bought or sold at any time during the day, if clients faced an issue outside of standard work hours they have traditionally been left in the dark — no matter how urgent their problem was. With H2cryptO, 24–7 live support is just one of the ways that we ensure no client is left in the dark no matter how small or large their question is.
The Future of Cryptocurrency and Cryptocurrency Exchanges?
While every crypto enthusiast wishes they had a crystal ball and could predict the future of Bitcoin, the reality is, no one knows exactly what is going to happen next. However, we can look at past performance and try to understand what factors affected the price then, and whether or not these factors are likely to continue pushing the price of Bitcoin up or down.
Crypto markets have traditionally had much less regulation in them than traditional financial markets. but similar to how companies were abusing accounting systems in the 90s leading to the Dodd-Frank act, the continued collapse of large crypto exchanges offering unusually high interest rates to increase their client base is likely to usher in stricter regulation and exchanges will be held accountable.
What Cryptocurrency Regulations Could Mean For Future Clients
As with any government regulation, crypto regulation is a hot-button topic with some believing that less regulation is a positive aspect of crypto. But more regulation can help prevent fraud and protect the long-term ecosystem and give clients more confidence in the cryptocurrency macro environment.
Traditionally, the CFTC regulates commodities while the SEC regulates securities and while the SEC recently argued that several different cryptocurrencies were securities, a federal judge ruled that cryptocurrencies such as Bitcoin were a commodity.
It is also important to note that there are nearly two billion people worldwide that are either unbanked or underbanked, meaning they do not have a bank account or use alternative financial services in the last 12 months. These numbers clearly indicate that traditional bank accounts are not doing enough to connect the underbanked world to modern financial technology. Since cryptocurrency has no inherent need for a bank account, as adoption increases, the number of users worldwide is also expected to rise as regulations occur worldwide making access to these types of technologies easier.
Paying to list coins on an exchange? You may have seen or heard how new cryptocurrencies pop up on different exchanges seemingly every day. But did you know that some crypto companies pay for these exchanges to list their coins? This has resulted in coins that either have security vulnerabilities, or which serve no real purpose listed and getting pumped “to the moon” before ultimately crashing. Good security practices must be used at all times to ensure that the coins listed are highly secure. And as we have seen even recently in 2022, many coins which lacked support and direction ultimately lost significant value.
Why Cryptocurrency Client Support is So Important
In the fast-moving modern era of crypto and blockchain, issues are expected to arise. Whether it is a question of verifying identity, troubleshooting a bank connection, or on a new coin offering, these issues should be addressed promptly. And more importantly, since cryptocurrencies can be traded day or night, any problems faced have traditionally not been addressed by crypto exchanges. The risks are even greater as many individuals have significant sums of money in their crypto wallets which makes them sensitive to bad customer service.
Finding a Cryptocurrency Exchange That Offers 24/7 Support is Paramount
While many crypto experts exist, most people do not have enough understanding of the technology to feel comfortable trading on a platform that has unreliable customer service or limited hours that help can be reached. With crypto rapidly becoming mainstream around the world, great growth equals greater responsibility to clients, ensuring that their funds are kept safe and secure.
The future of NFTs and Web3
Web3 is essentially an upgrade from our current World Wide Web to a decentralized, blockchain-run internet. The name Web3 is essentially the mark of the beginning of another phase of the internet, one which is led by users with open standards and protocols through the blockchain. The goal is that no single system or company is in control of internet connectivity through large server sites. While aspects of Web3 still have a long way to go, the building blocks of Web3 are an important part of the next digital era.
NFTs (Non-Fungible Token) is another buzzword that has floated around crypto spaces (and traditional media). They currently have many use cases including a digital representation of ownership of a physical or digital item. Each NFT is unique and unreplicable which is largely where the value of an NFT comes from. NFTs are an evolution of blockchain technology put into real-world use cases. While you may not be interested in owning the next piece of digital art, the future of this technology extends to many other aspects of our lives including digital ticketing, digital identities, healthcare tracking, real estate, and more. Imagine if you could transfer the deed to your property via an NFT or provide proof of ownership! The possibilities are endless and the adoption of past artwork is quickly coming.
Crypto is a fast-evolving, rapidly growing industry with huge potential. Today, it is more important than ever to keep your hard-earned money safe and secure on a cryptocurrency platform that offers 24/7 live support. With H2cryptO, this has finally become a reality.