Today's cryptocurrency market face five main challenges:

Lack of market understanding

Given a unique asset class that breaks traditional investment strategy models, the crypto market dynamics continue to prove elusive to most investors and analysts. Many fund managers and individual investors' learning and experience in traditional assets and commodities simply fails to translate reliably to this new class of assets, and furthermore a wave of new market entrants with no training or experience in trading are now part of the scene, influencing pricing with their expectation.

Regulatory uncertainty

The industry lacks a regulatory framework with which to evaluate and differentiate cryptocurrencies and clarify the good, the bad and the ugly. This has led some analysts to argue that "of the 1,500 (cryptocurrencies in circulation as at 2018), 90% are worthless, and of those, more than 90% are probably scams" (Andreas Antonopoulos, author of Mastering Bitcoin and leading cryptocurrency author, speaker and educator)". A lack of consistency in global regulatory frameworks creates further layers of speculation and geo-arbitrage, while new challenges to the traditional structures such as Project Libra continue to rattle the foundations and deepen conjecture.

Technological Complexity

A profusion of ongoing development in the blockchain space has created an exciting diversity of technological approaches, with continual innovation in blockchain mainnets, consensus mechanisms, governance approaches and niche use-cases.

This is good news for the space in the long term without doubt, and the successful solutions will emerge in due course from this phase, which may be compared to the Cambrian explosion of paleontological record. Which approaches will turn out to be the evolutionary blind alleys versus the protocols on which the economy of the future is built, remains to be seen - and in the meanwhile the individual technologies themselves are so complex and unique that very few individuals can genuinely understand the different options sufficiently to be able to compare them meaningfully.

Lack of Transparency

Cryptocurrency projects are all competitive commercial concerns. While many individuals involved are clearly committed to the success and development of the asset class as a whole, they remain contractually siloed from detailed business disclosures - and as such all published product information about any cryptocurrency must be regarded as marketing material, designed to highlight the advantages and strengths of any given asset in order to promote its increase in value.

As such, risks and weakness are inevitably downplayed, and while the nature of the distributed ledger technology itself creates specific forms of transparency, it is very difficult to compare assets with one another in qualitative terms.

Crypto as a store of value

In a market where most cryptocurrencies lack economic use-case or investment security status, the flow of value into and out of the cryptocurrency can be both erratic and manipulated. This raises a key question about their reliability as a store of value and bonafide medium of exchange. Volatility across the asset class in general and within individual currencies may be expected to continue for some time, as the market remains emergent and highly speculative.


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