Despite the Bearish Trends, Cryptocurrencies Client Base Increased by 122%, Says Silvergate Report
The year of 2018 has been the worst year for the Crypto space. The market cap tumbled after hitting the peak in December 2017. Many cryptocurrencies lost up to 90% of the price value, some of these even included established names.
Bitcoin, the largest cryptocurrency, kept losing the price war first six straight months, as it ended the losing streak in February earlier this year. However, as per a new report by the Silvergate Bank, it indicates that despite the bears creating a ruckus, the client base for cryptocurrencies kept increasing at a steady rate.
During the adverse times, several giant corporations joined or revealed their plans to join the Crypto race. JPMorgan became the first US banks to launch its own cryptocurrency. Even the social networking giant, Facebook joined the race, as it is reportedly in the final stages of launching its Stablecoin. This digital coin will be aimed at enhancing speed and security for cross-border transactions. Another important development is the integration of cryptocurrencies in global operations of payment solutions giant VISA Inc., which will boost the use of cryptocurrencies to a great extent.
The Silvergate report states that in 2018, the number of its clients venturing into the digital assets increased to 542, from the 244 of 2017. Apart from mere numbers, deposits also soared by 8% to $1.58 billion, from $1.46 billion in 2017. However, in spite of the positive numbers, the bank has maintained caution against investing in cryptocurrencies.
Cryptocurrencies have been quite unstable for the past few years, mainly due to the increasing number of speculators. The main reason behind creating cryptocurrencies was to create a substitute for traditional currencies for making payments. But it turned out to be subject to high-level speculations, which make it more of an investment asset.
In an official statement, the bank stated,
“Our business is subject to many substantial risks and uncertainties you should consider before deciding to invest in our common stock, including risks that that the digital currency industry may not gain widespread adoption, that legal and regulatory uncertainty regarding the regulation of digital currencies and digital currency activities may inhibit the growth of the digital currency industry, that our low-cost funding strategy may not be sustainable, that our deposits may be adversely affected by price volatility.”
Cryptocurrencies have great potential for growth if implemented properly. Several countries are working on their own cryptocurrencies. The United Arab Emirates has entered into an agreement with the kingdom of Saudi Arabia, for creating a mutual cryptocurrency, to facilitate the cross-border transaction with additional security and speed.
Especially, in countries which have troubled relations with the United States, demand for cryptocurrencies is on the rise. Venezuela, which has been falling down consistently, have found a unique way of using cryptocurrencies. Due to skyrocketing inflation rates, people started mining bitcoins and other cryptocurrencies, got paid for their services in US dollars and survived. Similar trends were found in other African countries.
Russia has been working on its own cryptocurrency for quite some time. President Vladimir Putin has been a strong advocate of digital tokens and blockchain technology for a long time. Since the country wants to end its dependence on the US dollar, especially after the fresh sanctions imposed by Washington, the country has decided to use cryptocurrencies for global trade.
Though the crypto space faces several challenges, the future is bright, and space will grow from strength to strength. As the global payments and remittance market expands, the scope for adoption of cryptocurrencies also increases, as transfers through digital tokens have added a layer of security, is completed without any cumbersome formalities, and is delivered with seconds, or at the most minutes.