How the Trading sector will make or break, the mass adoption of crypto

Written by: Gregory S Mathew

In February of 2019, among the numerous industry sectors adopting and leveraging blockchain technology, Trading and Investing sector emerged the market leader in terms of number of ICOs(Source). The sector also observed an impressive 166% growth in contrast to other sectors such as Financial Services which observed a 28% negative growth.

# of ICOs during February, sector-wise

Source

So why are sectors like Trading and Investing growing while traditionally dominant sectors like Financial Services and Fintech are depreciating?

The transition from fiat to crypto

Cryptocurrencies and its underlying blockchain technology have become sensational over the years, permeating into scores of industry sectors. So much so that it is being hailed as the technological breakthrough that will likely create a profound impact on people’s lives. But grandiose proclamations aside, the market space also gained popularity because of Bitcoin and it’s price extreme price volatility.

Whatever the reason might be, there are literally thousands of people seeking to dip their toes into the blockchain and crypto space. This is one likely reason why Trading and Investing sector is gaining momentum, as trading platforms offer a convenient and scalable way for traders to buy and sell crypto. For perspective on how massive these trading platforms have become, the top ten crypto exchanges in the world process as much $5.5 billion in trading volume (24h) between them.

On top of this, these trading platforms enable users to buy cryptocurrencies using fiat currency, thus acting as a bridge between both worlds. Most trading platforms tout their easy-to-use user interfaces, digital wallet solutions, portfolio management solutions in an attempt to attract newbies. With over 7 billion people on earth using fiat currency, the potential customer base for these platforms is virtually limitless.

The future of trading platforms

 Traditionally the Trading and Investing sector has been plagued with inefficiencies and riddled with security risks, which makes the entire process cumbersome and quite perplexing.

Enter blockchain technology and artificial intelligence!

Blockchain technology could enable traders to make direct transactions with others through a decentralized exchange, which eliminates the need for a trusted intermediary. In traditional trading circumstances, companies take a fee on each transaction that was facilitated on its platform. On top of this, traditional trading platforms are at serious risk of getting hacked like the infamous Mt.Gox hack. These platforms are known as centralized exchanges.

Decentralized exchanges, on the other hand, enable peer-to-peer direct transactions and are at a significantly lower risk of getting hacked. On top of being nearly impervious to hackers, decentralized exchanges also don’t suffer any downtimes, due to the inherent nature of blockchain technology.

What role does Artificial Intelligence play in the future of Trading? AI could eliminate human error by enabling traders to make better-informed decisions. AI best utilized in circumstances where there is an inordinate amount of data to be processed, from which the program can ‘learn’ to make better decisions. Thus an AI system could analyse the Gigabytes of historical data already available to enable traders to make the smart decision every time. Which is a far cry from how traders currently make decisions, often based on emotions or a ‘gut feeling’.

What’s fueling the growth?

The major component fueling the growth in Trading and Investing sector is the paradigm change in people’s perspective about blockchain and crypto. The mindsets have progressed, so much so, that established financial institutions and even governments are exploring these technologies. Thus the surge of interest among people in cryptocurrencies is likely fueling the rise of trading platforms, looking to onboard these users to their system.

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