Blockchain and the Future of the Financial Markets
The price of Bitcoin is skyrocketing. It is probably a good time to raise questions such as: What is going on with the financial markets? Within the last six months, capitalization of cryptocurrencies have more than tripled: it went from under $100 billion to over $300 billion. At the same time traditional fiat related assets did not show extraordinary performance. Naturally, the investors of the traditional hedge funds raised the question with the Fund’ managers about a possibility of creating a crypto currency and crypto assets portfolio.
Blockchain and ICO companies are becoming the new trend for 2017. The pioneers are positioning themselves to capture their market share. For example, Nousplatform is an early comer with a decentralized platform for investment funds. We met and interviewed Alex Man, CBDO and co-founder of Nousplatform to talk about blockchain technology and the future of financial markets.
As you have been in technology and financial markets for a while now, could you share some insights how technology can influence decision making in finance?
Man: In general, technology has been influencing the decision-making in finance for decades now. Some of the most successful and wealth related investments and companies are all technology related for example Apple, Tesla, Google, Microsoft, Oracle, Intel and Facebook just to name a few. All those companies representing different segments of economy but technology is a major driving force behind their success. Technology helps as track, research compare and validate information, thus helping people make decision in finance.
How blockchain is impacting financial markets these days and how will it change in the next five years?
Man: With the introduction of the Bitcoin January 3, 2009, the entire new market has been created. Bitcoin is the first decentralized digital currency. It is a truly global, decentralized cryptocurrency and digital payment ecosystem, system that works without a central repository or single administrator. Bitcoin has inspired the growth of the crypto currency and crypto assets market. Within last 4 years, we are witnessing this new segment of the market emerging with the Blockchain technology gaining enormous interest and popularity. It is very volatile market environment. With about only $6 billion in volume in the year 2016 its highest volume in 2017 has reached over $300 billion. Our vision is that in the next five years, it is possible that many segments of economy (such as finance, banking, insurance, real estate, accounting, manufacturing and many more) and some governmental organizations will adopt blockchain technology for their interactions with the investors and consumers and all parties involved in business activity. It is very transparent secure and honest way to deal with the complications in relationship between all parties as the information stored in nodes of the blockchain has to be verified by other nodes in the network (we call it consensus) and becomes final and cannot be manipulated or altered by anyone ones transaction is complete.
When it comes to security of funds and investing via blockchain and smart contracts, how secure can the transactions actually be?
Man: It is very secure because the assets stored in the Investor’s “Cold Wallets”, and only Investor has the secure key file to open this wallet. If Investor loses the key or somebody steals the key is the only way to lose the assets. Investment Funds and other entities have no key and cannot access Investor’s assets. This fact provides most safety and security for the consumer.
As you are raising an ICO at the moment, could you tell if Bitcoin pricing affects ICOs and the cryptocurrency market in general? Is there any relation between Bitcoin and ICOs?
Man: In our opinion, this market is so new and volatile that every event will affect the market. Price of the Bitcoin affects ICO. In turn, number of the ICO affects the price of a Bitcoin. Let me explain: For example, more and more consumers looking to get involved in crypto market. They have to purchase any crypto currency accepted by ICO organizers in order to participate. They are converting Fiat in to cryptocurrency. The most popular way to do it is to purchase Bitcoins or Ethereum. This creates the demand on the market. The more demand, the higher the price. That an example how ICO affects the price of the crypto currency and creates liquidity on the market. As for the price of the Bitcoin it does not affect ICO, because it is still has an equivalent in FIAT backer want to contribute. We would say the volatility of the Bitcoin effects ICO more than a price of a Bitcoin. The only way the price of the Bitcoin effects ICO is this: when there is a spike in the price people have tendency to keep a Bitcoin as a speculation instrument rather than contributing to ICO.
We are living in the ICO boom right now. As you have experience in the field, could you tell how to differentiate a good and promising ICO from the bad one?
Man: The number of ICO entering the market creates a challenge for the backers to pick the right company. There are few criteria to consider when choosing the ICO. Is there a working concept? Is there a need or a want on the market for the Idea, Service or Product? Is the team has enough integrity, experience and expertise to run successful business? Had the company brought the right advisors onboard? Is company properly funded? The cost of the ICO is so expensive where most of the organizers are thinking if the expanses can justify the purpose. Is compliance and proper registration in place? The most important—use common sense! The market is still hungry for the right ideas, services and products and they will enter the marketplace, but among some useful ICO will be some exceptions that driven by greed, pure judgements and criminal intent. So please ones again, use your common sense and do your research before making final decision to participate.