Making Buying and Selling Bitcoin Simpler

 

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“Investing and trading in Bitcoin is perceived as difficult, with no clearly-defined process or marketplace like there is for traditional stocks, shares and currencies, but it need not be that way thanks to market innovation“

Kevin Murcko, CEO of FXPIG and CoinMetro

Bitcoin is a reinvention in money and finance that has captured the imagination of millions around the world. Mistrust of the ‘big banks’ and of government monetary policy decisions has taken them down a path that inevitably leads to Bitcoin. Unfortunately, for some the path ends here, when they realise that buying and selling Bitcoin is often a highly troublesome task.

The cryptocurrency market is still in its infancy. There are noticeable growing pains, with demand outstripping the supply of reliable and secure exchanges. The largest exchanges have an enormous backlog of support tickets and ID verification checks. A colleague of mine signed up to one of the top five exchanges, five months later she received an apology and a request for extra verification documents.

Many of the largest exchanges only accept US dollars (USD), meaning a currency conversion charge of around three per cent for those that don’t have USD bank accounts. You can’t send the money using a currency converter as it must come from an account under your name. Unless you’re willing to open a USD account, the majority of participants are down about three per cent before they even place a buy order.

Once your money has arrived safely at the exchange – minus currency conversion – you can start to buy your favourite cryptocurrencies. While this may seem like the simple part, more trouble unfortunately lies ahead. The history of cryptocurrency exchange hacks dictates that best practice is to store your Bitcoin off of an exchange, so that you can control the private keys. This isn’t a simple as it sounds as you need to:

  • Select the most secure wallets
  • Store your passwords
  • Store/know your backup phrases

Far too many stories have emerged of users losing access to their cryptocurrency investments because one or more of the above is no longer known or available to them. Similarly, if you accidentally send Bitcoin to the wrong Bitcoin Cash address, then there is no personal or business banker you can turn to for help to retrieve the funds. They are gone – forever.

The role of forking

Bitcoin forked in August 2017, splitting into Bitcoin and Bitcoin Cash. In effect, the one currency became two variants with their own separate future paths. Depending on where you stored your Bitcoin before the fork, you may not have received it yet or may never even see your Bitcoin Cash. If they were offline, in so-called “cold storage”, it will take some technical know-how to get them out safely.

The journey is not over once you finally exchange funds into your cryptocurrencies, as you may wish to sell your currency as and when you need the cash. If this is the case, you will need to send your Bitcoin back to the exchange. To get the best price, you will need to sell on the USD market. Once sold, the exchange will charge ‘in-house’ forex conversions fees to send the USD received to a Sterling, Euro or any other traditional currency account. This fee can be up to three per cent.

Counting the cost

You have bought and sold your Bitcoin, and it’s been both difficult and costly. Just through fees you have seen 4-6 per cent skimmed off your revenue- not to mention the time and technical difficulties of adhering to Bitcoin best practices by storing your currency off exchanges. This model is clearly not accessible to the masses and needs to be simplified to encourage mainstream adoption.

However, there is a light at the end of the tunnel. Exchanges such as CoinMetro are overcoming these barriers to adoption. The solution lies in not creating a new and independent financial system, but in adapting the current financial systems to seamlessly integrate Bitcoin. This would solve many of the pain points that occur when the cryptocurrency and banking worlds collide: banks which shut personal accounts to customers that have bought Bitcoin, or banks which decline credit card transactions for cryptocurrency purchases.

Bitcoin advocates know the old system is broken, but need to accept a crypto-only model has its flaws as well. The hybrid approach holds great promise and makes for the most cost-effective and effortless approach.

The retail forex sector is best placed to make Bitcoin accessible to the masses. FXPIG was part of the industry effort in the early 2000s to build a retail forex market from scratch. It can again lead the charge and use its expertise to make Bitcoin investing simple and interoperable with existing currencies.

Regulating the trading of cryptocurrencies

Regulation is the main reason why retail forex companies like FXPIG are best suited to create simpler Bitcoin exchanges and services. They have a successful regulatory compliance record which creates a greater sense of trust between them and their banking partners. The turbulent banking relationships with Bitcoin currency and Bitcoin exchanges are the source of the friction. Established retail forex services can use existing banking networks to accept multiple fiat currencies with fees much closer to spot, they have the infrastructure to accept SEPA, SWIFT, credit card and local bank payment. Simple storage and spending of Bitcoin as well as a great user interface are the last pieces of the puzzle.

Before the millennium, forex trading was considered the exclusive domain of professional traders. The early retail forex services managed to take a complex product and simplify it, carving out an entirely new industry. Mass adoption will be good for Bitcoin as it will stabilise the price and encourage innovation to improve the chain. Out of all the innovators in the Bitcoin space, retail forex companies will be the ones to bring Bitcoin to the masses.

Source: cryptonews

Bitcoin and Blockchain Fair Media Partner: Crypto News Australia 

 

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