Crypto Markets and the actionable market applications

To date, public blockchains in Crypto Markets have been used with some success in the following areas:

  1. Speculation
  2. Darknet markets
  3. Cross border payments
Crypto Markets
Image Source Google

Crypto Markets Speculation

In Crypto Markets the main use for Cryptocurrencies is undoubtedly speculation. Their prices are volatile and people make and lose a lot of money trading these coins. The fact that there are no established methods to value a cryptocurrency means that prices are likely to remain volatile for some time. This differs from traditional financial markets where pricing models help to constrain prices to within broadly understood limits. Equities have well-established pricing methodologies.

Discounted forecast cash flows, book value, and enterprise value calculations can help to establish a consensus on the value of a company. Ratios such as earnings per share, price to earnings, and return on assets can help to compare share prices between similar companies. Fiat currencies trade on the basis of comparative economic data. Other traditional financial assets have other standardized pricing methodologies. This is changing—as the industry matures, pricing models are being explored, but it will take some time for these models to become widely accepted.

Crypto Markets – Darknet Markets

Cryptocurrencies have been used with some success to buy items from underground crypto markets. Unfortunately for some, the traceability of certain Cryptocurrencies makes them flawed candidates for illegal activity. In 2015, two US Federal Agents from the Drug Enforcement Agency (DEA) and the US Secret Service, sought to enrich themselves while conducting an undercover investigation of the Silk Road drug marketplace. Perhaps they believed that Bitcoin was anonymous and untraceable. They allegedly stole, bribed, blackmailed, and laundered the proceeds while undercover and were eventually charged with money laundering and wire fraud.

According to the complaint, Force was a DEA agent assigned to investigate the Silk Road marketplace. During the investigation, Force engaged in certain authorized undercover operations by, among other things, communicating online with ‘Dread Pirate Roberts’ (Ulbricht), the target of his investigation. The complaint alleges, however, that Force then, without authority, developed additional online personas and engaged in a broad range of illegal activities calculated to bring him personal financial gain.

In doing so, the complaint alleges, Force used fake online personas and engaged in complex Bitcoin transactions to steal from the government and the targets of the investigation. Specifically, Force allegedly solicited and received digital currency as part of the investigation, but failed to report his receipt of the funds, and instead transferred the currency to his personal account. In one such transaction, Force allegedly sold information about the government’s investigation to the target of the investigation. The complaint also alleges that Force invested in and worked for a target.

On 1 July 2015, Force pled guilty to money laundering with predicates of wire fraud and theft of government property, obstruction of justice, and extortion. Later, on 31 August 2015, Bridges admitted that he stole over $800,000 of Bitcoin while on the case, and pled guilty to money laundering and obstruction of justice.

Crypto Markets – Cross Border Payments

While there may have been some limited success in using Cryptocurrencies as a vehicle to move fiat across borders, adoption has been limited. I personally performed an experiment in 2014 when I sent $200 Singapore dollars to my friend in Indonesia using three methods: Western Union, bank transfer, and Bitcoin. The Bitcoin route was by far the worst user experience, and the most expensive. However, Bitcoin has become more usable since then, and I expect it to continue to improve further.

The core problem in Crypto Market is that in a conventional fiat-to-fiat remittance, whether through a financial services agency such as Western Union or through the banking system, there is only one exchange of currencies through the banking system, there is only one exchange of currencies.


Suggested Topic

Currency and International Payments for Digital Transactions


If you like our blog and posts, please share them with your friends and spread the word. Please feel free to share your suggestions and feedback in our contact and help us to improve at this.

Latest Posts