How Cryptocurrency will Change the Forex Landscape
Within some few years, blockchain-powered Cryptocurrency has impacted global finances significantly, and one of such areas is the Foreign Exchange (forex) industry. Cryptocurrency is highly innovative and with its value wildly fluctuating while capturing the attention of the entire world, it has quickly proven that it is here to stay. Despite the fact that Cryptocurrency continues to exert a strong influence on the current direction of the foreign exchange industry, it is the technology that gave rise to Cryptocurrency that is perfectly poised to reshape the FX industry in a vital and never-before-seen way. This technology is Blockchain.
The State of the Forex Industry in Recent Times
In the entire universe, the foreign exchange market happens to be the largest as well as the most liquid when compared to other markets. It operates for 24 hours every day and is open for 5 days every week with its base positioned mainly in London and recording a turnover which is nearly twice that of New York every day. New York is second in line and ranks at its closest rival.
The foreign exchange market works in a decentralized structure even if its liquidity, as well as world currency pricing, is maintained by leading central Banks such as the Federal Reserve as well as the Bank of England. Different banks offer varying prices. In addition to being responsible for setting currency rates, all information that relates to currency demand and supply around the world is controlled by Central Banks which is an indicator that organizations which have control over supply happen to control demand through indirect means.
Some key players directly influence how the foreign exchange industry operates. These five key influencers include corporations, governments, traders, as well as investment funds and Banks.
Blockchain Tech will Change the Foreign Exchange Industry – Here’s How
Global spending on blockchain solutions is projected to reach about 2.9 billion U.S. dollars by the end of 2019 and also anticipated to reach 11.7 billion by 2022. Since the market is rapidly increasing in terms of activity, blockchain space will continue to expand as predicted by experts by about 42.8% annually right up to 2024.
When it comes to the foreign exchange industry, there are different ways that cryptocurrency or the blockchain technology will impact it significantly and one of such approaches is concerning decentralization. You see, the reliability of blockchain is assured and it provides permanence in information recording whether it is transactions, price of currencies, etc. This means that the forex industry will have the chance of decentralizing the record-keeping process while enhancing stored info availability. Now smaller traders, as well as new businesses, will get to have more power as individuals and firms get the ability to carry out peer-to-peer exchanges instead of having to pass through intermediaries such as the central Banks and this will really transform the operation of the forex industry.
Security is another aspect that must be considered, and blockchain can help to create improvements for forex trading. With the decentralization of record-keeping, it will be more challenging to whack sensitive data. Keep in mind that cybersecurity happens to be an enormous challenge which the financial industry must deal with, and blockchain is set to become the technology that can be a catalyst for beefing up security to a vast extent.