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It's Put Up Or Shut Up Time For Cryptocurrencies

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It's put up or shut up time

The biggest question mark in the virtual currency space revolves around blockchain technology, which some optimists have anointed as the greatest thing since sliced bread. Blockchain is the digital, distributed, and decentralized ledger that underlies most cryptocurrencies and is responsible for processing transactions without the need for a financial intermediary, as well as logging data in a transparent and unchanging manner.

financial service and nonfinancial setting. It could expedite money flows from one party to another, as well as help businesses track goods in a supply chain in real time. The list of what blockchain can do is actually quite long. But what blockchain hasn't done is demonstrate that it can provide real-world benefits without any training wheels." data-reactid="67">On paper, blockchain has a lot of potential in both the financial service and nonfinancial setting. It could expedite money flows from one party to another, as well as help businesses track goods in a supply chain in real time. The list of what blockchain can do is actually quite long. But what blockchain hasn't done is demonstrate that it can provide real-world benefits without any training wheels.

blockchain hasn't yet proven its ability to scale. Yet, blockchain can't prove its ability to scale if it's not given an opportunity by large businesses. We call this a Catch-22, and it's made the near term for blockchain incredibly murky." data-reactid="68">You see, up to this point, we've witnessed plenty of successful proof-of-concept testing done with blockchain, but we haven't seen any big businesses adopting the technology on a broad basis. That's because blockchain hasn't yet proven its ability to scale. Yet, blockchain can't prove its ability to scale if it's not given an opportunity by large businesses. We call this a Catch-22, and it's made the near term for blockchain incredibly murky.

Despite the fact that cryptocurrencies have no traditional fundamental metrics upon which they can be valued, investors have piled into virtual coins with the assumption that blockchain acceptance would be swift. However, that hasn't been the case, and it's thrown the entire thesis of owning cryptocurrencies into limbo.

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An hourglass on a desk, with half of the sand having moved from the top to the bottom portion.

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Don't overlook these concerns, either

To be clear, this isn't an easy fix for the developers behind virtual currencies. Proving scalability will probably take years.

$1.1 billion in cryptocurrencies was stolen in a little over five months since 2018 began. Worse yet, because cryptocurrencies are mostly unregulated, there's little the Securities and Exchange Commission can do to recover stolen funds, some of which are concealed by privacy coins that obfuscate the sender and receive of funds. " data-reactid="93">Furthermore, these developers will have to convince businesses that blockchain technology is just as safe, if not safer, than existing infrastructure, which is debatable. According to a recent analysis from Carbon Black, some $1.1 billion in cryptocurrencies was stolen in a little over five months since 2018 began. Worse yet, because cryptocurrencies are mostly unregulated, there's little the Securities and Exchange Commission can do to recover stolen funds, some of which are concealed by privacy coins that obfuscate the sender and receive of funds. 

Another concern to be aware of is the growing presence of institutional investors. I know what you're probably thinking: "Doesn't the presence of financial institutions validate cryptocurrencies?" Unfortunately, the answer is no. The reason being that most institutional firms have a mixed or negative view on virtual currencies, and their entrance into the space has coincided with the precipitous decline in bitcoin futures, which were introduced in mid-December.

Investors want tangible results, and this slide in cryptocurrency valuations may not end until they get them.

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Sean Williams has no position in any of the stocks or cryptocurrencies mentioned. The Motley Fool recommends Nasdaq, but has no position in any cryptocurrencies mentioned. The Motley Fool has a disclosure policy." data-reactid="101">Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Sean Williams has no position in any of the stocks or cryptocurrencies mentioned. The Motley Fool recommends Nasdaq, but has no position in any cryptocurrencies mentioned. The Motley Fool has a disclosure policy.

Source : https://nz.finance.yahoo.com/news/apos-put-shut-time-cryptocurrencies-115100287.html

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