Still high on the agenda for Blockchain and Bitcoin is adoption by institutions. The thoughts behind this are that if there is institutional buy-in for cryptocurrencies, the proliferation and adoption of this new technology will greatly expand.
However, while there has been marked uptake on Blockchain, and the notion of cryptocurrencies, there is a bit of a hand brake for other facets of this emerging space. Bitcoin has had relatively slow uptake from enterprises and institutions based on its decentralized and unregulated nature.
However, there are a few more things that need to be ironed out full for cryptocurrencies to reach full integration and adoption. Other than regulation, which remains key and has slowly been worked upon, there is also the need for custody and liquidity.
These were the sentiments of Justin Chow, Head of Business Development Asia for Cumberland, speaking at BlockShow Asia 2019.
“Custody, liquidity, and regulations are the top three petitions from institutional investors jumping into crypto,” he said.
Indeed, these three facets are key for the security and peace of mind for an institutional buy-in. Regulation is no doubt the most often discussed as governments and regulators try and find workarounds in this nascent ecosystem.
It has been a slow process towards regulation, but there is starting to be equal buy-in from both sides as those involved in crypto seek out clarity and regulation, and those in charge of making the rules are – for the most part – allowing a good balance between control and innovation.
The other areas discussed; custody and liquidity, also play an important role as these are key market conditions that institutions associate with success. Custody of cryptocurrency also takes on a special connotation as there are a lot of concerns about guarding and storing cryptocurrencies.
Liquidity also plays a big part in the decision making of institutional investors and users of cryptocurrency as these new markets are enticing and exciting, but their liquidity is still uncertain and relatively small.
Because there is already rather large supporting evidence that Blockchain and crypto are gaining adoption and interest from institutions, it is clear that as the ecosystem continues to mature, and hit some of these requirements, there will be a tipping point.
However, as the uptake steadily grows, it is fair to say that the tipping point will not come until those three requirements are truly met.