How can cryptocurrency trading be formalised, institutionalised and made more secure?
How to build formalised and high-security transaction institutionalised cryptocurrency trading markets?
In recent years, many technology startups have based their growth and competitive advantage on business, technological, product, service, marketing or other innovations. Banks are reluctant to provide investment loans to emerging startups basing their growth on innovative technologies. In such a situation, innovative startups emerge and are financed through such external sources of funding as investment funds, business angels, securities issuance, crowdfunding and others. Crowdfunding will develop intensively in the future as an alternative to classic forms of external financing for business ventures. It is an alternative to the financial service offerings of financial sector institutions, particularly in the segment of financing innovative start-ups. Commercial banks operating within the framework of classic deposit and credit banking often avoid lending to innovative start-ups due to difficulties in assessing credit risk. In such a situation, crowdfunding can be a good solution to the problems of finding external funding. On the other hand, cryptocurrencies, which operate outside institutionalised and centralised financial systems, are growing in importance. Perhaps in the future, cryptocurrencies will displace traditional currency from online financial transactions between fintechs, financial institutions, innovative start-ups, online technology companies running social media portals and their customers, and between users of these online portals. In addition to this, it is becoming essential to improve the security of online financial transactions and settlements carried out through online mobile banking. In this connection, blockchain technology is developing as an application for securing online transactions and data transfer. An increasing number of large companies are announcing the creation of their own cryptocurrency. Some investment banks such as JP Morgan have announced the creation of their own cryptocurrency for settlements with key counterparties. The development and implementation of ICT information technologies, advanced data processing technologies Industry 4.0 and Internet technologies into the business activities of companies and enterprises facilitates the execution of financial operations on the Internet and ensures a high level of security of Internet data transfer. The development of technological innovations, ICT information technologies, advanced information processing technologies co-creating the current technological revolution Industry 4.0, financing through crowdfunding, securing online transactions with blockchain technology, the increase in the use of cryptocurrencies in these settlements, etc. are likely to be important determinants of the development of innovative, technological start-ups operating on the Internet and factors in the development of the knowledge economy in the years to come. Consequently, the development of open innovation is correlated with the issue of innovation and entrepreneurship development in the economy. A significant proportion of innovative startups develop their business model based on open innovation. On the other hand, in macroeconomic terms, the development of open innovation can be an important determinant of economic development in developing countries and in developed knowledge-based economies. In view of the above, research shows that the spread of open innovation and open knowledge bases is an important issue for building a sustainable economy in a technologically developed and developing country. A number of predictive studies show that cryptocurrencies will grow in importance in the future in financing various transactions and settlements carried out electronically, through the Internet, on social media, in investment banking, etc. Currently, many technology startups base their growth and competitive advantage on technological, product, service, marketing or other innovations. However, in order for the financing of new business ventures, innovative startups to develop using cryptocurrencies it is necessary to increase the scale of systemic formalisation and institutionalisation of transactions carried out using cryptocurrencies, to build formalised cryptocurrency markets and to increase the security of transactions carried out using cryptocurrencies in the future.
In view of the above, I address the following question to the esteemed community of scientists and researchers:
Can the planned taxation of cryptocurrency transactions be a first step for increasing the scale of systemic formalisation and institutionalisation of cryptocurrency transactions, building formalised cryptocurrency markets and increasing the future security of cryptocurrency transactions?
How to build formalised and highly secure transaction institutionalised cryptocurrency trading markets?
How can cryptocurrency transactions be formalised, institutionalised and made more secure?
What is your opinion on this topic?
What is your opinion on this subject?
Please respond,
I invite you all to discuss,
Thank you very much,
Warm regards,
Dariusz Prokopowicz
All modern currencies to a large extent derive acceptability by the confidence of users. They are in fact currencies by fiat. In short, for crypto-currency transactions and other digital currency trading to gain acceptability by users, they have to be at least backed by trusted institutional structures (i.e.. governmental bodies) which the very users potentially entrust the scrutiny and due diligence that will otherwise need to be done on these currencies. This in effect should ensure their acceptability and security.
When necessary, they should be kept in a secure location utilising techniques like encryption, secret sharing, and physical locks. Backup keys and seeds should also be kept safely stored (whether on paper, digitally, or in another format) and shielded from environmental hazards.
Private and secret keys should be encrypted and kept on the cryptographic device. Password or PIN entry is necessary for decryption. In other words, the key encryption key must be derived using a password or PIN.
Above objective can be achieved only if governments (of major economies), international financial institutions such as World Bank and IMF back cryptocurrency transaction.
The essence in the meaning of the Greek word "crypto" is Secrecy. Secrecy is the basic, and fundamental, characteristic of all the main forms of cryptocurrencies (and these seem to be proliferating), and that immediately poses the inherent problems revolving around the issue and usage of such currencies.
This is the main first consideration which must be kept in mind in attempting to answer the research objective here posited.
A factual complication is the fact that far too many people have been thinking and using such currencies in a context which is often very erronuously linked to the practices of blockchain.
It is significant that as we write the International accountancy and auditing bodies (IAS, IAAS) have not yet formalised universally accepted regulations for accounting, reporting, and auditing regulation of such assets. And, even as many continue to take risks with the usage of such currencies, the only route left for some governments was to make attempts at considering such cryptocurrencies as virtual assets, and trying to make their usage within their jurisdictions possible only after parliamentary approval of legislation that governs the required licensing, and regulation of entities who plan to operate in and with this sector.
In Malta the persons behind the drafting and enactment of such legislation were highly competent and serious, and they went about their work in excellent manner. Even perhaps to the point that when finally enacted such legislation had the impact of requiring from would-be practitioners standards so high that must have somewhat discouraged business growth making use of these currencies, and few in fact sought to obtain the required licences. (For more detail consult the website of the Malta Financial Services Authority, MFSA).
Dr. John Consiglio
Department of Banking and Finance,
The University of Malta.
There are several ways to formalize, institutionalize, and make transactions using cryptocurrencies more secure. Here are some suggestions:
Overall, a combination of these approaches can help to formalize, institutionalize, and make transactions using cryptocurrencies more secure. It's important to note that there is no one-size-fits-all solution, and different approaches may be appropriate for different use cases.
