Here comes the parity…

Prologue.

Four years ago I was a naive 20-year undergraduate student who would believe cryptocurrency to be nothing more than a mere speculation-based trading currency. For me, all the crazy stuff lied within my portfolio. It was still important for me to know what sets these coins apart from their ancient rivals, fiat currencies. And if I could understand the use cases of any particular coin then kaboom! I would have added insignificant gains to my portfolio. And the volatility drove mainly through speculation back then as much as now it gets when the boom-bust cycle is driven through tweets and singular macroeconomic events like banning the crypto-exchanges.

Largest cryptocurrency exchanges like Binance, Coinbase, and Kraken became the inspiration for many newly emerging crypto exchanges in India and worldwide. Ironically these exchanges are centralized platforms where you can buy or sell decentralization-based financial instruments called cryptocurrencies. But such a traditional form of exchange is pertinent for providing traders the platform where they can meet their counterparts within the bid-ask spread. Just like any traditional exchange or a broker, these platforms also face halting while executing trades when volumes in the exchange market just blow off during panic selling which is often the case with cryptos once or twice every year due to extreme volatility.

Although these exchanges safeguard the keys and digital wallets and provide trading facilities, they really fail to derive the use case for which cryptos were made, decentralization.

And it was because of halting trades, high transaction costs, reduced liquidity, and partial/complete bans being put on these exchanges in several countries during early 2018 that I decided to sell off my entire portfolio.

While it can be true that I might have missed several great profit-making opportunities, until and unless I don’t understand the complete working principles and valuation metrics of a financial instrument, it leaves me in jittery and dilemma, mathematically and emotionally. So I am rather happy to not bear the volatility risks.

Since then I haven’t yet invested a single penny in these coins.

But I realised, cryptocurrencies could just be the tip of an iceberg called “the blockchain”. Blockchain technology is more than a unique financial system, it is a parity-enabled and consensus-based peer-to-peer model that is going to revolutionize every business that works on the digital platforms whose servers are basically centralized data centers.

Starting from how blockchain can address inefficiencies in several financial systems like credit card networks and payment gateways, I will try to explain several use cases of blockchain majorly in financial markets.

Till then stay tuned!