How trust can shape the success of blockchain technology

Blockchain technology today, is attempting to do to the finance industry what internet did to the media and entertainment industry. The technology which provided an avenue for cryptocurrencies, was recently tagged as the future of online payment in the recent Global Ecommerce Summit. 

Today, nearly everyone has heard one or two things about bitcoin since the invention of the blockchain technology. Cryptocurrency carries out trade in millions of US dollars, in various cryptocurrency exchanges which facilitates trades. Major companies around the world have also begun to accept cryptocurrencies as a form of payment. 

This shift towards the blockchain backed currencies is largely due to a peer-to-peer exchange kind of transaction which has provided an avenue for transparency and security.

In an era where demand for transparency and security in online transaction is high, the massive acceptance of blockchain technology, especially in the finance sector is no surprise.  

These digital currencies have paved the way for seamless transfer of funds across borders, catering to the unbanked population in a secure and transparent manner.

 

Also Read: Could cryptocurrency prevent accounting frauds?

 

More platforms and organizations today are gradually making the shift towards adopting blockchain technology not just for online transactions and payments but also other procedures like “Know-Your-Customer” in the case of identity verification.

The financial sector as a whole, benefits greatly from the blockchain technology. From incorporating the technology for accurate record-keeping and facilitating cryptocurrencies, the financial sector has more to gain than to lose.

This is one of the reasons why several financial institutions have expressed commitment to adopting blockchain on a long term basis. 

As more cryptocurrencies are developing, there is a growing embrace towards the idea of blockchain. This is leads to the creation of more exchanges to facilitate trade.

However, a Bitwise report revealed that a larger percentage of trade volumes in most of these exchanges were fake with only a few genuine ones.

In spite of this report, the Bitcoin futures volumes on exchanges reached a record high of USD$12 Billion in the month of May this year.

This growing acceptance and adoption of cryptocurrencies only mirrors digital assets as becoming a major form of money and commerce used around the world daily, in everything from small to high-value transactions.

In addition, the recent unveiling of Facebook’s Libra, shows the definite future of commerce in cryptocurrencies. 

 

The need to provide adequate support facilities for the crypto ecosystem

 

In the blockchain world today, many upcoming projects engage in pre-sale of crypto coins to investors. However, this process has proven to be ladened with lots of red flags.

For instance, purchasing these crypto assets in secondary markets, there’s often no guarantee that the blockchain project will deliver on being launched.

A substantial number of these markets are not open to the public but to a selected few individuals with high net worth who are willing to trade in large volumes.

Also, these sales often happen in private or in secret with the prices which are not fully transparent.

If blockchain heralds a new future for commerce, then there’s a dire need for the provision of a mature futures trading ecosystem for accurate commercial hedging.

This ecosystem should include digital asset lending & borrowing, basis markets, calendar spreads, cross margining and many others. The development of an ecosystem that will support and enhance the crypto market, making it more accessible to all. This rise in demand and shift requires more solutions to support it. 

In an effort to address these drawbacks highlighted above and several issues relating to the crypto market, CoinMarketCap launched a transparency initiative along with other major exchanges to facilitate price data transparency in crypto trading. This initiative has been referred to as Data Accountability and Transparency Alliance (DATA).

 

Also Read: How Singapore startup Bountie aims to change the e-sport scene using cryptocurrency

 

Exchanges like Binance, OKEx, Huobi and a number of others are part of this initiative. This is a solution response to the report published by Bitwise concerning the fake bitcoin trading volumes report. Transparency is a crucial requirement in the crypto market today, if confidence is needed to be restored. 

In addition, another blockchain project, CoinFLEX has made a timely move in creating the world’s first physically delivered digital currency futures exchange.

Considering these three factors are important in futures contracts and crypto trading as a whole – trust, transparency and access – CoinFLEX looks to create a futures product that consumers can completely trust, have unrestricted access to and transparency when it comes to pricing.

This is a first of its kind in the digital assets ecosystem and the futures market. It provides avenues for investors to hedge digital assets exposure with zero index or settlement manipulation risk.

The aim is to resolve the settlement issue with a cash-settled digital asset futures contracts currently offered in the market and provide high leverage methods to hedge digital assets exposure. 

The platform is creating futures on blockchain projects that have been well funded in private markets but yet to launch digital assets that have not been made public yet also listing futures on these assets via a process called as Initial Futures Opening (IFO).

Currently, Polkadot has been listed has its first IFO with the hope to have many more blockchain projects on board.   

The importance of creating a solid support system that will enhance the digital assets market cannot be overemphasise has size at this point. If the future of commerce lies in digital assets, then insightful actions need to be taken to ensure when this future arrives. 

 

Also Read: Singapore a honeypot for cryptocurrency and blockchain projects, data shows

 

The blockchain technology will stay true to its framework if there is a guarantee of transparency, trust and unrestricted access for investors.

However, the issues mentioned earlier are being well responded by block chain projects which has been gratifying to watch and companies are already taking steps to foster both transparency and security.

In the same way, there is always a hope to see more projects respond in a similar way since this can guarantee the bright predictions of blockchain in e-commerce.

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