Since the explosion of cryptocurrency popularity in 2017, cryptocurrency exchanges are also seeing unprecedented increases in growth every year, with old players in the game growing more powerful and newer entrants into the market aiming to get a slice of the market share for themselves.
This has led to the wrath of numerous governments placing stringent regulations on the use and purchase of cryptocurrencies; this regulatory environment has warmed somewhat since and people are now speculating as to whether governments are going to require crypto wallets.
The Rise of Cryptocurrency Wallets And Exchanges
Cryptocurrency exchanges are currently experiencing massive growth and increases in customer base, with swaths of exchanges being set up since the launch of Bitcoin.
This is even after the market-shaking event whereby Mt. Gox, the largest exchange in the world at the time shut down due to a crippling cyberattack where Bitcoin was stolen in 2014. Governments have been forced to take notice of cryptocurrency.
Since these events, dominant players in the game have emerged, with the following exchanges being the largest by trading volume (10/05/2020).
Bybit: $3,402, 331,088.
Of course, the popularity and increasing presence of cryptocurrency exchanges also have a great influence on the number of cryptocurrency wallets that are being registered. This is because to actually effectively trade on an exchange, a wallet is required.
The more successful exchanges become, the more wallets are going to be required. This is reflected in the figures with under 10 Million blockchain wallets registered in 2016 compared to 40 Million in 2019.
Additionally, the development of different types of cryptocurrency wallets, with numerous different players in the industry has led to increases in the prevalence of wallets through market saturation and greater customer choice and differentiation. For example, mobile wallets are great for individuals that are always on the move; whereas a Trezor Wallet is most effective for individuals who need a physical, disconnected device for security.
The blockchain technology market is only expected to increase in size, going from $1.2 Billion in 2018, to an estimated $23.3 Billion in 2023. If this occurs, many more cryptocurrency wallets are going to be required by new users and more trades are going to be made on exchanges by these users as a result of these increases. World governments will be given even more reason to consider cryptocurrencies if this occurs.
As mentioned previously, governments around the world have taken incredibly hostile stances on cryptocurrencies in the past, with multiple countries outlawing them with outright bans. Despite this, countries around the world are starting to take notice of the increasing success and sustained confidence of both digital currencies as a whole, and as a consequence, cryptocurrency wallets. Examples of countries that have attempted to launch cryptocurrencies can be found below.
Even the governments of major world powers have been studying the effectiveness of digital currencies for a number of things, namely Russia that has looked into the possibility of using digital currency to facilitate rapid and cheap transfers of money across state lines and investments, although these plans have been put on ice.
Additionally, with the growing influence and power of cryptocurrencies, there is a new wave of liberal finance that seeks to be free from government control, this hasn’t stopped governments of countries from toying with the idea of creating a centralized digital currency most likely a stable coin, pegged to the national currency.
It is uncertain how the adoption of a Central Bank Digital Currency (CBDC) will fare in nations, with blockchain platforms providing leading-edge competition and promises of greater privacy and autonomy.
Due to the massive increases in cryptocurrency adoption, if governments wish to become involved in cryptocurrency use, or the use of digital currencies it is likely they will need crypto wallets; due to the fact that they are currently an integral part of digital currency infrastructure and due to the fact that non-custodial wallets are safer than centralized storage solutions.
Central Banks around the world are also dragging their feet with CBDC programs, with 85% stating they are unlikely to bring anything to fruition in the near term. This gives the opportunity for wallet platforms and the crypto community to drive light years ahead of similar, centralized government projects, which may further engage governments to use crypto-wallets; to adapt to the more developed system of digital currency management and not to fall behind.
Initially, governments and financial institutions widely disregarded cryptocurrencies and envisioned that they would not last. A few years on and the market has since gone from strength to strength despite causes for concern.
From what has been discussed, it can be seen that more and more individuals are being drawn to the autonomy and freedom of cryptocurrencies; freedom that will not be provided by government CBDC programs.
It is incredibly likely that more and more governments will use digital currency wallets in the future, to reduce currency transfer expenses and the time taken for these transfers and for other utilities. In the event that CBDCs are not taken up successfully, or are not developed in pace with current blockchain solutions, governments may have to bend to the will of the people who will be using proven, safe and autonomous solutions rather than the less developed alternative.
The number of people using cryptocurrency wallets will keep increasing and it would not be surprising to see governments using them in the near future, the rise of wallets will be aided by the increasing popularity and usage of cryptocurrency exchanges.
There is no doubt that cryptocurrencies are here to stay, and they hold a promising future. However, conventional investors are still afraid of using crypto wallets because of the risk that interplays with this emerging market and the underlying technology.
While it’s true that cryptocurrencies and crypto wallets will always be attractive scammers and fraudsters, especially if you hodl or transact large amounts, history has taught us banks are riskier.
In this article, we will delve into some of the reasons why crypto wallets and cryptocurrencies are risky and why traditional banks are riskier. Let’s dig in.
Risks of using crypto wallets
Note that there are two types of crypto wallets in existence. They include hot wallets and cold wallets. Each comes with its own risks. Therefore, none guarantees the total safety of your crypto coins.
The major difference between the two crypto wallets is that hot wallets are connected to the internet, and cold wallets are not.
When using hot wallets like online/web wallets, mobile wallets, and desktop wallets, some of the risks involved include;
High possibility of hacking attempts and scams
High possibility of downloading viruses
Because hot wallets rely on the internet, they are usually exposed to internet risks.
Worst Crypto hacks
Mt. Gox Hack
Mt. Gox was once the biggest Bitcoin exchange in the world. Launched in 2010 and based in Shibuya Tokyo Japan, the exchange faced a series of undercover attacks between 2011 and 2014. The attacks cost the exchange and private users close to 850,000BTC, which was worth around $460 million back then. As of 2019, the stolen Bitcoin would be worth $6.12 billion.
NiceHash, a Slovenian Bitcoin mining platform, was attacked by hackers in 2017 who stole 4,700 BTC, which amounted to about $64 million at the time.
Bitstamp is another Slovenian Bitcoin exchange startup that was founded way back in 2011 as an alternative to Mt. Gox. However, just like Mt.Gox, the exchange was hacked in 2015 by anonymous hackers who made away with 19,000BTCS worth $5 million at the time.
On the other hand, some of the risks involved when using cold wallets like Trezor, Ledger, CoolWallet, and Keepkey include:
Possibility of the hardware device getting damaged, lost or stolen
Imperfect implementation of the hardware device could allow hackers to gain access to your crypto coins
The compromised production or shipping process of the hardware device could result in loopholes that hackers might use to gain unauthorized access to personal information.
Risks of using cryptocurrencies
Although cryptocurrencies have the full backing of blockchain, which offers impeccable security levels, they are not without risks. Some of the risks involved when using cryptocurrencies include;
Instability of value: The high volatile nature of cryptocurrencies makes them quite unstable. Their value keeps changing out of the blue, making them a highly risky investment venture.
Transaction errors: It is highly possible to send crypto coins to the wrong wallet, especially if you are not keen on what you are doing. The wrong transaction details mean you could lose thousands in a single transaction without any recourse.
Theft and scams: The crypto space has, for the longest time, been highly unregulated. This means the market is susceptible to lots of fraudulent activities. And because transactions rely on the internet, hacking attempts are not uncommon.
Compliance risks: Not all countries in the world have openly welcomed the use of cryptocurrencies.
As you can see, cryptocurrencies and crypto wallets have several risks that make people shy away from them. Nonetheless millions of people use crypto wallets and cryptocurrencies as can be seen in the graph below.
However, compared to traditional banking, which is riskier?
Risks of using traditional banks
One of the major risks of using traditional banks is exposure to illegal activities. For the longest time, traditional banks have faced a lot of criticism because of many illegal activities like fraud, scams, and money laundering, which has left many people penniless.
Examples of Scams by Big banks
Wells Fargo Fake-Account Scandal
In September 2016, the federal bank regulators revealed that Wells Fargo employees had secretly created millions offraudulent savings and checking accounts on behalf of customers without their consent. The bank was hit with a $185 million fine.
As ofJanuary 2020, John Stumpf the former CEO of Wells Fargo has been banned for life from banking and ordered to pay a $17.5 million fine for his involvement in the scandal.
Australian Banks fee-for-no-service scandal
In Australia,four of the nation’s largest banks, Commonwealth Bank of Australia (CBA), Westpac Banking Corp (WBC), Australian and New Zealand Banking Group (ANZ) and National Australia Bank (NAB), have been accused of improperly collecting fees for services they never provided. The banks would have to return as much as AUS$ 1 billion as well as face criminal charges for their behavior.
Gold and Silver Price fixing
In2016 Deutsche bank agreed to pay $60 million to settle the US gold price-fixing case. The German bank also paid $38 million to settle similar litigation over alleged silver price manipulation.
However, the bank was not the only one to be sued by investors. Other banks to be sued by investors included Barclays Plc, Bank of Nova Scotia, HSBC Holdings Plc and Societe Generale.
Besides the risk of illegal activities, traditional banks also come with market risks that can be financially detrimental. Banks like Lehman Brothers and Washington Mutual went bankrupt because of wrong financial strategies.
Evidently, one of the main reasons why traditional banks are riskier when compared to crypto wallets and cryptocurrencies is the human factor.
Most of the illegal dealings that have plagued traditional banks are due to the manipulation of documents and data, which with blockchain’s immutability capability, is highly impossible.
With cryptocurrencies and crypto wallets, individuals also get benefit from transparency that promotes credibility. It is quite hard for anyone to mess with any financial transaction without anyone knowing. There is also automation that reduces much involvement of people in the transaction processes.
Other benefits that come with crypto wallets and cryptocurrencies include trustless transactions that eliminate intermediary vulnerabilities and decentralization that eliminates a single point of failure.
It is no secret that new technology always faces some opposition before it is accepted. The same applies to cryptocurrencies and crypto-wallets. However, when compared to traditional banks, crypto wallets and cryptocurrencies offer a safer option of transaction.
The elimination of third party reliance and introduction of automation makes the digital coins a safe bet for financial transactions and crypto wallets a safe storage option. If the case of Wells Fargo is anything to go by, then manual financial systems and institutions leave a lot to be desired.
Besides transferring funds across borders without middle-mans, using cryptocurrencies open business to an entirely new customer base around the world. There are many reasons why companies should adopt cryptocurrencies, however many just do not know how to do so.
As a business owner, you may have been thinking about implementing cryptocurrencies as a method payment and a way to accept payment in your company. You are not alone in this, as accepting cryptocurrencies as a payment method is becoming more and more common. Despite this, there are still a number of inherent risks involved in adopting cryptocurrencies and it would be prudent to make yourself aware of these risks and how to put the best control measures in place to ensure that you are protecting your own interests and the interests of your clients.
The opinion on cryptocurrencies and their viability as an option in business have slowly been trending in a better direction since their initial explosion in popularity in 2017. The severe crackdown imposed by numerous world governments has slowly begun to soften and as a consequence, there are more businesses than ever that are accepting cryptocurrency in their business, especially Bitcoin.
Despite the warmer approach to digital currencies, many business owners are still wary about the volatility and risks that cryptocurrencies can pose to their business and their clients. They want their customers paying in cryptos and to buy with cryptos in a safe manner. Yet, many business owners do not know how to do so.
The Rise Of Businesses Wanting To Accept Cryptos
More businesses than ever before are accepting payment in cryptocurrencies and some of the businesses doing so are names that you will likely be familiar with. For example, the German division of Burger King, Starbucks, UK-based food delivery service OrderTakeaway and Richard Branson’s Virgin Galactic among the many beginning to adopt virtual currencies. In fact, there are hundreds of retailers that are following the trend.
There are a number of reasons why companies are starting to adopt cryptocurrencies. Firstly, for businesses that are involved in foreign trade, they are able to transfer currency across borders without a middle-man, this means that they are able to avoid expensive transfer fees, which leads to more retained profits for each sale. Furthermore, money can be transferred across a blockchain close to instantly, whereas with the traditional banking model it can take days for funds to clear.
Being open to using cryptocurrencies also allows businesses to open themselves up to an entirely new customer base. By advertising the acceptance of cryptocurrencies, businesses can make themselves available to customers in different countries by diminishing the cost associated with serving cross-border customers. Finally, sensitive data that is transmitted over a blockchain, such as payment information is stored under lock and key and is protected from nefarious agents, meaning that the potential for customers to be defrauded is incredibly minuscule. This can also be a big selling point for customers that do not like the idea of banks keeping tabs on their every move and every transaction that they make.
The Risks Involved In Adopting Cryptos
One of the first risks associated with a business accepting the use of cryptocurrencies is the price volatility that comes from cryptocurrencies. Whilst investors can benefit from cryptocurrency price volatility, a business may accept payment in cryptocurrency and by the time they convert the payment into fiat currency, the cryptocurrency may devalue significantly, leading to an unprofitable transaction for the business. Businesses can take some precautions against cryptocurrency volatility, although because no transaction is actually instantaneous, completely eliminating the risks is essentially impossible.
One of the second risks involved in adopting cryptocurrencies comes from the way in which they need to be stored. Your cryptocurrency holdings are only as safe as the crypto wallet that you use to store them and cyberattacks can leave your holdings totally drained.
Limited regulation and the freedom afforded by cryptocurrencies is one of the major selling points, however, the limited regulation poses a question of reliability. If you are not comfortable with the potential for loss, even if it is a small chance, you may be better off waiting until you feel that your business could viably withstand such an event.
How To Mitigate The Risks of Accepting Cryptocurrencies?
One of the first ways to mitigate the risks involved in accepting and paying in cryptocurrencies would be to arm yourself with a cryptocurrency wallet that has high levels of security. There are a number of wallets on the marketplace that have high-quality security and this will go a long way towards preventing you from falling afoul of criminal actors stealing your cryptocurrency holdings.
One of the ways in which businesses can mitigate the risk of price volatility with cryptocurrencies would be to store your cryptocurrencies and make payments by utilizing stablecoins, which have been specifically created to ensure price stability. This will prevent the aforementioned issue of a price drop turning a profitable transaction into a transaction that operates at a loss. Another solution to this problem would be to convert any cryptocurrency received into fiat currency as soon as it is received, to minimize the possibility of a price drop before the conversion is made.
Finally, to combat the issues of reliability and limited regulation, you will need to do a lot of research into how cryptocurrencies are viewed in your locality. From this information, you will be able to ascertain whether or not it is practicable to accept cryptocurrencies in your company. Furthermore, from your research, you will be able to identify the cryptocurrency that is best suited to your needs, there are thousands of cryptocurrencies in circulation at this point and only a number of them will be perfectly suited to your company.
Hey everyone, the team has been working hard on-boarding exchanges all over the world. This release will help more people, in more ways, onboard safely and easily into crypto.
We have two new options for CoinSpace users. For users in the we’ve integrated MoonPay which allows users in select countries to buy crypto-assets like BTC, BAT, BCH, BNB, DAI, EOS, ETH, LTS, TrueUSD, USDC, XLM, and XRP with ApplePay and some credit cards.
“We are very excited to partner with Moonpay to offer our users a simple way to purchase cryptocurrencies with fiat money. Coin Wallet is dedicated to making it easier for newbies in the industry to get started, so making crypto available via fiat was a logical next step towards achieving our mission,” commented Jonathan Speigner, Founder & COO of the Coin.Space Wallet.
By partnering with Moonpay, Coin Wallet is advancing in its mission of making cryptocurrencies more accessible. This was also highlighted by Moonpay co-founder and CTO Victor Faramond who commented: “At Moonpay we believe a user-friendly onboarding experience is essential to make cryptocurrencies accessible to everyone. We’re thrilled to partner with CoinSpace to help users top-up their accounts instantly.”
Going forward, CoinSpace will collaborate to continuously improve the fiat-crypto onboarding experience for users. In the near future, CoinSpace are also planning to add support in more countries.
List of supported countries
United States of America (see supported states below)
List of supported US states
District of Columbia
Digital banking is another term that is given to the increased popularity and development of online banking services. Digital banking has been developed and implemented by institutions worldwide in an effort to address some of the major shortcomings of traditional banking systems, such as a lack of customer service, lack of convenience for customers and poor access to certain financial services. Furthermore, the uptick in digital banking has given rise to a different type of banking, namely, cryptocurrency banking which has, in turn, increased the adoption of cryptocurrencies as a form of payment.
The earliest implementation of digital banking was longer ago than many people may initially realize, with the advent of digital banking services such as ATMs for cash and bank cards being issued in the 1950s-1960s. By the 1990s, online banking had slingshotted to major popularity in the developed world due to the rise of the internet.
Why is Digital Banking On The Rise?
One of the ways in which digital banking has changed the banking sector is by increasing the level of convenience to the customer. In fact, 43% of people have stated that they believe convenience and having effective online services go hand in hand. In the United States, customers have ranked which institutions are the best at promoting access to digital services, and they were ranked according to the below image.
In the United Kingdom, there has been a noticeable rise in the number of and the success of “challenger banks”. These are banks that have no physical branches and all interactions with customers are handled digitally, some have 24/7 telephone customer service. The main reasons for these changes are that people in the United Kingdom are looking for quicker, more convenient banking options.
Savings on Infrastructure and Business Costs
One way in which the move towards digitization can positively affect the businesses in the banking sector is the potential for such a move to promote cost-savings as a result of making operational procedures more streamlined. This also allows banking providers to utilize the funds freed up from cost savings to provide better services to customers, such as by reducing fees for customers.
Digitization can also benefit both the business and the customer due to the fact that it allows for simplification of the onboarding process. A real example of where this has been implemented can be seen from US-based Mariner Bank, who have implemented SaaS from Digital Onboarding, to allow their staff to spend less time filling in forms and therefore spend more time on personally serving customers who require assistance.
How Does Digital Banking Relate to Cryptocurrencies?
Cryptocurrencies have cut a disruptive and controversial figure in the world of finance, since their rise to popularity in 2017, and due to the fact that they are digital assets, they are beginning to form an interesting relationship to the current digital banking landscape.
One of the reasons for the slight change of heart in relation to cryptocurrencies has been the gradual relaxing of cryptocurrency regulations in certain states. Previously, bans on cryptocurrency activities were common, which prevented the symbiotic growth between digital banking and cryptocurrencies.
Some of the behemoths of the financial sector are starting to embrace cryptocurrencies and recognize the value that they could bring to their organization. JP Morgan, for example, has created its own digital currency, with the primary objective of decreasing the amount of time it takes for money to be transferred between two parties. Furthermore, the banking giant claims that it will allow them to facilitate transfers over different blockchains, with the company claiming they have always seen the potential in digital currencies.
Digital banking has helped to spawn a new type of bank, the cryptocurrency bank. Whilst a cryptocurrency bank may sound complicated, they are in fact simply institutions that fulfill the same functions as a normal digital bank would, however, there is one key difference. True to their name, these types of banks include cryptocurrency-related services as a part of their repertoire for their customers.
There has even been a huge rise in the number of cryptocurrency ATMs available to customers for use.
How Will This Change Impact Cryptocurrency Banking?
The rise of digital banking has and will continue to have a positive effect on the viability and the utility of cryptocurrency banking, despite the fact that we are still quite far away from mainstream adoption.
In 2020, 153 Million unique Bitcoin wallet addresses are in circulation, with the number of active wallets being around 550,000. Whereas in February 2019, there were 32 Million Bitcoin wallet addresses, which poses an increase of 121 Million wallets since then.
Cryptocurrency banking does also faces intense challenges for the future. In its current state, the cryptocurrency banking system is slightly ill-fitted for purpose, although progress is always being made. Threats from the traditional banking sector and the continuing volatility of the regulatory landscape relating to cryptocurrencies present significant hurdles to widespread adoption. It is strongly believed that cryptocurrency banking can fill one major gap in the traditional and digital banking spheres, which are international money transfers. Transferring money between countries via blockchain massively reduces the associated costs of the transfer and allows for the money to be sent much more quickly than is possible with traditional banks. Both businesses and individuals sending money to their home country for their families stand to benefit greatly from this, as globalization increases the number of international money transfers.