Lately, there have been a lot of discussions about cryptocurrencies impacting financial markets and banks. Considering that cryptocurrency is impacting financial and investment sectors we have asked cryptocurrency expert Alex Faliushin from CoinLoan how cryptocurrencies are impacting the financial markets and banks?
Q) As a professional in cryptocurrencies and blockchain, could you briefly explain what is the current situation in the crypto market regarding coin prices going up and down?
AF) At the rise of the year prices at the cryptocurrency market began falling. Certain currencies lost more than 40% of their value. This worried many market participants. However, if to analyze the situation during the last three years, it is obvious that this reduction is temporary and seasonal. After this, it will rise again reaching its new peak values. In 2017 a lot of new cryptocurrencies have entered the market. This attracted many new players among individual traders and investors so as VC funds all over the world. In our opinion, the cryptocurrency market will continue developing, and the capitalization will increase. Regulators will begin normalizing cryptocurrency trade. This will reduce volatility and will lead to a further increase in the number of participants of the global cryptomarket on a long-term horizon.
Q) How does cryptocurrency pricing affect the crypto market regarding investments? Is it safe to invest in crypto now or is there some risks?
AF) We do not think that we have the right to give advice and recommendations on investing into certain ICOs or cryptocurrencies, but we can give general recommendations. The seasonal market fall is a good time for profitable investments for a term of 4-6 months. From our point of view investing in cryptocurrency is still a very risky business. So it is important to diversify investments and contribute to a portfolio of various assets. Not only BTC and ETH would be added there, but also other cryptocurrencies with high growth potential. Remember our example with Ripple price? We consider that an ICO with a reasonable token structure and value which grow during the project development can show good profitability. We would recommend being cautious with those projects which spend too much money on advertising and promotional activities. This means that they are fund-raising–oriented, but not product-oriented. Result-oriented projects will not “burn” enormous amounts of marketing funds for self-advertising.
Q) We have seen that in Q4 2017 cryptocurrencies raised danger for fiat money. What situation do you think we will see in 2018 regarding crypto vs. fiat?
AF) We consider that 2018 will witness the trend of general growth of cryptocurrency value. However, volatility will remain high. In our CoinLoan project, we want to expect the potential “planned” price reduction up to 30%. However, even if it is lower, we have foreseen the risk coverage mechanisms for our participants. We expect that in 2018 a few “superstars” will appear on the market – cryptocurrencies with growth exceeding ten times during a short period. An unreasonable 99% blasting growth will be followed by a crash. So we do not plan to work with such currencies yet, but decided to deal with more stable ones if this notion can be applied to the cryptomarket.
Q) Goldman Sachs recently commented that Bitcoin is being accepted as an actual currency. This means competition for crypto financial institutions. How do you see crypto financial institutions advancing within the next two years regarding a variety of different solutions for clients?
AF) As for Goldman Sachs’s statement about accepting Bitcoin as an actual currency, it was mentioned there that this was possible in theory. We also consider this possible, but not this year. Currently, Bitcoin is rather an investment and gambling tool, not a method for paying in shops. Cryptocurrencies become more and more integrated into our daily life, so the aspect of legal co-operation between cryptocurrency and fiat is the main one for governments and crypto community. We consider that regulators will normalize this process gradually allowing banks to work with crypto exchanges and cryptocurrency holders providing that AML procedures be followed. Large market players – investment funds and even some countries trying to attract “crypto investors” by establishing liberal conditions for working with cryptoassets. We have studied this aspect thoroughly and concluded that ICOs ought not to ignore conventional financial structures (first of all, banks) if speaking about a long-term approach. For providing reliable long-term operation, we have received a special financial license which gives the right for transferring and receiving cryptocurrency and fiat payments and using payment systems in several countries. We think that during the next 1-2 years the trend for legalizing crypto activity and applying a more responsible approach to digital assets will intensify.
Q) How blockchain and cryptocurrencies are impacting the current investment market in finance and stocks and what changes can we expect in the next 5 - 10 years?
AF) In my opinion, during the next 5-10 years the trend of cryptocurrency and blockchain technology development will be fully positive. More and more states would officially accept and legalize cryptocurrencies, implement blockchain technologies in routine processes, transfer their real estate, education, medical, financial registers and accounting systems. This will allow creating a safe, transparent and fully automatized infrastructure which makes life easier. Currently more and more start-ups and companies prefer raising funds for business development by ICO / ITO (Initial Coin Offering/Initial Token Offering) instead of conventional initial public offering (IPO). Even now ICO is a fast, modern and transparent way to receive financial resources.