At press time, the second-largest cryptocurrency by market cap and the number one competitor to bitcoin is trading for approximately $324. This is more than $30 less than where it stood yesterday afternoon.
The altcoin space continues to bleed out following the announcement that the Securities and Exchange Commission (SEC) was postponing its decision regarding a bitcoin ETF until September 30. To be fair to the SEC, the organization has a huge responsibility on its shoulders. Bitcoin and cryptocurrencies are largely unregulated. There’s much to risk in the space, and if people are led down a dark path where theft, financial losses and similar problems are imminent, the SEC needs to take this into consideration and work to prevent it.
We have seen over the past few days that bitcoin, Ethereum and the cryptocurrency arena are still highly vulnerable, and volatility isn’t likely to halt anytime soon. We are consistently witnessing price swings due to both market influences and negative news. In many ways, cryptocurrency is still a birthing industry – a new form of technology that has a lot of bugs and kinks to be worked out.
There is nothing wrong with assuming that crypto will – one day at least – take over the financial arena and replace fiat. While this isn’t likely to happen for some time, many believe it will be so at some point. If this is to occur, however, we need to remain vigilant while fighting the technical issues that make it vulnerable.
One of these issues is security. The idea of offering insurance in the crypto space is still a relatively new idea, and thus, it isn’t always available. Many exchanges and crypto-based companies cannot afford the insurance premiums if their systems are ever the victim of cyberattacks that result in lost or stolen funds amongst both customers and business executives. Here and there, you do come across an exchange like Gemini in New York that offers coverage similar with FDIC insurance, but to call this a rarity would be an understatement.
Hacks and malicious activity remain constant in the cryptocurrency space. Many insurance companies don’t want to take the chance that they’ll continue to occur, and that they’ll have millions of funds to replace at the end of the day. This tells us why premiums are so costly, and as most companies are just starting out, the funds they need to pay for these premiums simply don’t exist.
This is just one of several “hidden” problems striking the digital currency arena. We say “hidden” because it is not an issue being discussed in every news platform, but the fact remains that there are many steps that need to be taken in we’re going to legitimize this industry, some of which don’t involve simply getting the “right investors” involved.