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Why Is the Crypto Market Booming?  – ReadWrite

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Nate Nead


If you’ve been paying attention to the cryptocurrency markets lately, you’ll know that Bitcoin, Ethereum, and even altcoins like Dogecoin are surging in popularity. Bitcoin itself has hit a peak above $60,000, while hovering at less than $10,000 just a year before. 

So what’s responsible for this sudden boom in the cryptocurrency market? And is this upward trajectory going to remain – or is this another short-lived crypto bubble about to pop? 

A Bit of History 

First, let’s cover a bit of history. Bitcoin, one of the earliest cryptocurrencies (and certainly the most popular) was created in 2008 by an unknown individual (or possibly, a group of people). It began circulating in 2009, but didn’t gain much initial attention. A handful of early adopters immediately saw the potential of the currency, but for most people, cryptocurrency was seen as something mysterious, uncertain, and downright strange. 

Around 2017, there was a major surge in crypto interest. Steadily rising prices, widespread available of crypto wallets, and heavily emphasized media attention sent Bitcoin prices soaring to nearly $20,000 by the end of the year. But this growth was retrospectively viewed as volatile and reactionary, as prices began to plummet in 2018 down to less than $7,000. Prices for other cryptocurrencies saw similar trends – rising sharply, then falling and stabilizing. 

There, prices and public interest held steady for a few years, with a few lows and highs. 

It’s only in the past few months that Bitcoin and other currencies have seen a massive resurgence, hitting massive all-time highs. 

How exactly did we get here? 

Coinbase and Renewed Public Acceptance

First, Bitcoin and other currencies have demonstrated their capacity for resilience – and the general public is seeing signs that these currencies are here to stay. Despite plummeting to major low points after a burst bubble in 2018, many naysayers insisted that this was the beginning of the end for a fad currency. But this was not the case; Bitcoin remained in use consistently in the years that followed, showing no signs of weakening as a currency in the market. Those who remember the sharp rise and fall 3 years ago have a renewed perspective on the currency, seeing it as more legitimate and capable of enduring hardships. 

Adding to public confidence is a combination of many different businesses and organizations throwing their full support behind Bitcoin and other currencies. For example, Coinbase – an exchange where users can buy, sell, and use cryptocurrencies – introduced its initial public offering (IPO), trading publicly for the first time. It’s also reported enormous revenue growth, fueling investor optimism for the futures of both Coinbase and the cryptocurrencies traded on its platform. 

Additionally, many other major companies have made recent moves that demonstrate the true power of cryptocurrency. For example, Visa and PayPal now offer cryptocurrency-related services, and Nvidia (known for their graphics cards) recently announced a new chip designed to specialize in cryptocurrency mining. It also helps that celebrities like Elon Musk have publicly stated their support for cryptocurrencies, driving their fans to purchase more coins. 

Bitcoin Alternatives

We’ve spent most of this article talking about Bitcoin, since it’s the most visible and the most prominent of all cryptocurrencies, but we also need to acknowledge the supporting role of other cryptocurrencies, including Ethereum, Litecoin, and even the meme-based Dogecoin. Interest in these cryptocurrencies has a kind of synergistic effect; when more people buy and value a currency like Bitcoin, there’s a ripple effect to other currencies as people try to get in closer to the “ground floor.” But rising activity in other currencies is also good for Bitcoin, since it always gets residual attention from being the dominant player on the market. 

Inflation and Economic Woes

Some people are investing more heavily in cryptocurrency because they have long-term economic concerns. Heavy quantitative easing, higher wages, cheap borrowed money, and other factors could be leading us to a period of high inflation and the reduced spending power of the American dollar. If this environment unfolds, a decentralized, independent digital currency would hypothetically increase in value compared to USD – resulting in a profit for holders. 

COVID-19 and the Remote Digital Future

It’s also worth noting that the COVID-19 pandemic had a major impact on how we see and use technology on a daily basis. For many months, people were practically stuck indoors, paying digitally for everything and working remotely. It made people realize how decentralized we’ve become and how dependent we’ve become on digital technology – even if we’re not fully augmented cyber-humans yet

In a world where people work remotely, pay digitally, and have full trust in online services, cryptocurrency is king. 

FOMO

We also can’t afford to neglect the role of FOMO – the fear of missing out. When a consumer sees their friends, family members, and even strangers on the internet profiting off a trend, they’re often filled with anxiety at the thought of “missing out” on this opportunity. As Bitcoin rose from $10k to $20k, doubling the holdings of Bitcoin holders around the world, millions of people bought in just so they could be part of the assumed ride from $20k to $30k. Ironically, this increased buying action is a big part of what pushed the price of Bitcoin higher, driving even more FOMO.

The trouble with FOMO is that it often has a pyramid scheme-style effect; people sometimes buy in only because they believe someone else will buy in at a higher point, rather than because they believe in the inherent value of what they’re buying. Inevitably, when FOMO-driven buying actions reach a peak, they tend to crash in the aftermath. 

Is This Another Bubble? 

So is this the start of another bubble? Will we see the price of Bitcoin and other cryptocurrencies “pop” like it did in 2018? 

It’s hard to say for certain, but there are a few factors that can help us contemplate the future accurately. 

The price of Bitcoin, and its value, is derived almost entirely from consumer belief – just like all other forms of currency. There’s nothing inherently valuable about the piece of paper we call a dollar bill. The value comes from the fact that we collectively believe in its buying power; we have total confidence that it’s going to be accepted no matter where we take it, and that other people believe in its long-term reliability. The same is true for gold; it’s true that gold is scarce, but scarcity alone doesn’t make it valuable (for example, radioactive waste is even scarcer than gold, but its value is practically negative). Gold is valuable because we all believe it’s valuable. 

Accordingly, the future of Bitcoin is entirely dependent on how consumer belief is changed. Currently, Bitcoin has proven itself practically “unbreakable.” It’s survived for 13 tumultuous years. It’s survived multiple burst bubbles. It’s even survived multiple hacking and manipulation attempts – even during its more vulnerable early years. Because of this, it would take a lot for consumer confidence to be shaken. 

One force that could spur another big drop is regulatory action. The SEC, and regulatory agencies around the world, are closely scrutinizing the trading patterns of cryptocurrency. If they somehow restrict or modify access to cryptocurrency for large segments of the population, it could have a major impact on value and trading. 

That said, the sharp rise in the price of Bitcoin may be an exaggerated one. While it’s true that consumer confidence is high (and still rising), it’s hard to say whether the price increases are an accurate reflection of the pace of confidence increases. In other words, it makes sense that the price of Bitcoin is going up – but this big of a leap may be unjustified. 

Economics is a complex field of study and Bitcoin is a complex financial construct. No one can say for certain how the stock market is going to perform in the future – and for cryptocurrencies, we have far less information and less historical precedent. It’s easy to see how we got to this point, since we have the benefit of hindsight, but it’s pretty much impossible to say where we go from here. 

Nate Nead

Nate Nead is the CEO & Managing Member of Nead, LLC, a consulting company that provides strategic advisory services across multiple disciplines including finance, marketing and software development. For over a decade Nate had provided strategic guidance on M&A, capital procurement, technology and marketing solutions for some of the most well-known online brands. He and his team advise Fortune 500 and SMB clients alike. The team is based in Seattle, Washington; El Paso, Texas and West Palm Beach, Florida.

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Fintech Kennek raises $12.5M seed round to digitize lending

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Google eyed for $2 billion Anthropic deal after major Amazon play


London-based fintech startup Kennek has raised $12.5 million in seed funding to expand its lending operating system.

According to an Oct. 10 tech.eu report, the round was led by HV Capital and included participation from Dutch Founders Fund, AlbionVC, FFVC, Plug & Play Ventures, and Syndicate One. Kennek offers software-as-a-service tools to help non-bank lenders streamline their operations using open banking, open finance, and payments.

The platform aims to automate time-consuming manual tasks and consolidate fragmented data to simplify lending. Xavier De Pauw, founder of Kennek said:

“Until kennek, lenders had to devote countless hours to menial operational tasks and deal with jumbled and hard-coded data – which makes every other part of lending a headache. As former lenders ourselves, we lived and breathed these frustrations, and built kennek to make them a thing of the past.”

The company said the latest funding round was oversubscribed and closed quickly despite the challenging fundraising environment. The new capital will be used to expand Kennek’s engineering team and strengthen its market position in the UK while exploring expansion into other European markets. Barbod Namini, Partner at lead investor HV Capital, commented on the investment:

“Kennek has developed an ambitious and genuinely unique proposition which we think can be the foundation of the entire alternative lending space. […] It is a complicated market and a solution that brings together all information and stakeholders onto a single platform is highly compelling for both lenders & the ecosystem as a whole.”

The fintech lending space has grown rapidly in recent years, but many lenders still rely on legacy systems and manual processes that limit efficiency and scalability. Kennek aims to leverage open banking and data integration to provide lenders with a more streamlined, automated lending experience.

The seed funding will allow the London-based startup to continue developing its platform and expanding its team to meet demand from non-bank lenders looking to digitize operations. Kennek’s focus on the UK and Europe also comes amid rising adoption of open banking and open finance in the regions.

Featured Image Credit: Photo from Kennek.io; Thank you!

Radek Zielinski

Radek Zielinski is an experienced technology and financial journalist with a passion for cybersecurity and futurology.

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Politics

Fortune 500’s race for generative AI breakthroughs

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Deanna Ritchie


As excitement around generative AI grows, Fortune 500 companies, including Goldman Sachs, are carefully examining the possible applications of this technology. A recent survey of U.S. executives indicated that 60% believe generative AI will substantially impact their businesses in the long term. However, they anticipate a one to two-year timeframe before implementing their initial solutions. This optimism stems from the potential of generative AI to revolutionize various aspects of businesses, from enhancing customer experiences to optimizing internal processes. In the short term, companies will likely focus on pilot projects and experimentation, gradually integrating generative AI into their operations as they witness its positive influence on efficiency and profitability.

Goldman Sachs’ Cautious Approach to Implementing Generative AI

In a recent interview, Goldman Sachs CIO Marco Argenti revealed that the firm has not yet implemented any generative AI use cases. Instead, the company focuses on experimentation and setting high standards before adopting the technology. Argenti recognized the desire for outcomes in areas like developer and operational efficiency but emphasized ensuring precision before putting experimental AI use cases into production.

According to Argenti, striking the right balance between driving innovation and maintaining accuracy is crucial for successfully integrating generative AI within the firm. Goldman Sachs intends to continue exploring this emerging technology’s potential benefits and applications while diligently assessing risks to ensure it meets the company’s stringent quality standards.

One possible application for Goldman Sachs is in software development, where the company has observed a 20-40% productivity increase during its trials. The goal is for 1,000 developers to utilize generative AI tools by year’s end. However, Argenti emphasized that a well-defined expectation of return on investment is necessary before fully integrating generative AI into production.

To achieve this, the company plans to implement a systematic and strategic approach to adopting generative AI, ensuring that it complements and enhances the skills of its developers. Additionally, Goldman Sachs intends to evaluate the long-term impact of generative AI on their software development processes and the overall quality of the applications being developed.

Goldman Sachs’ approach to AI implementation goes beyond merely executing models. The firm has created a platform encompassing technical, legal, and compliance assessments to filter out improper content and keep track of all interactions. This comprehensive system ensures seamless integration of artificial intelligence in operations while adhering to regulatory standards and maintaining client confidentiality. Moreover, the platform continuously improves and adapts its algorithms, allowing Goldman Sachs to stay at the forefront of technology and offer its clients the most efficient and secure services.

Featured Image Credit: Photo by Google DeepMind; Pexels; Thank you!

Deanna Ritchie

Managing Editor at ReadWrite

Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.

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UK seizes web3 opportunity simplifying crypto regulations

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Deanna Ritchie


As Web3 companies increasingly consider leaving the United States due to regulatory ambiguity, the United Kingdom must simplify its cryptocurrency regulations to attract these businesses. The conservative think tank Policy Exchange recently released a report detailing ten suggestions for improving Web3 regulation in the country. Among the recommendations are reducing liability for token holders in decentralized autonomous organizations (DAOs) and encouraging the Financial Conduct Authority (FCA) to adopt alternative Know Your Customer (KYC) methodologies, such as digital identities and blockchain analytics tools. These suggestions aim to position the UK as a hub for Web3 innovation and attract blockchain-based businesses looking for a more conducive regulatory environment.

Streamlining Cryptocurrency Regulations for Innovation

To make it easier for emerging Web3 companies to navigate existing legal frameworks and contribute to the UK’s digital economy growth, the government must streamline cryptocurrency regulations and adopt forward-looking approaches. By making the regulatory landscape clear and straightforward, the UK can create an environment that fosters innovation, growth, and competitiveness in the global fintech industry.

The Policy Exchange report also recommends not weakening self-hosted wallets or treating proof-of-stake (PoS) services as financial services. This approach aims to protect the fundamental principles of decentralization and user autonomy while strongly emphasizing security and regulatory compliance. By doing so, the UK can nurture an environment that encourages innovation and the continued growth of blockchain technology.

Despite recent strict measures by UK authorities, such as His Majesty’s Treasury and the FCA, toward the digital assets sector, the proposed changes in the Policy Exchange report strive to make the UK a more attractive location for Web3 enterprises. By adopting these suggestions, the UK can demonstrate its commitment to fostering innovation in the rapidly evolving blockchain and cryptocurrency industries while ensuring a robust and transparent regulatory environment.

The ongoing uncertainty surrounding cryptocurrency regulations in various countries has prompted Web3 companies to explore alternative jurisdictions with more precise legal frameworks. As the United States grapples with regulatory ambiguity, the United Kingdom can position itself as a hub for Web3 innovation by simplifying and streamlining its cryptocurrency regulations.

Featured Image Credit: Photo by Jonathan Borba; Pexels; Thank you!

Deanna Ritchie

Managing Editor at ReadWrite

Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.

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