New Bitcoin economy threatens traditional markets

By MichDon | MichDon | 21 Apr 2020

A recent study published on the blog of Oxford University Law Faculty. states that bitcoin (BTC) trading should be strictly regulated. The reason? If the trade in bitcoin and other cryptocurrencies is released, it can be dangerous for the "real" financial markets.

Research

According to researchers Hadar, Jabotinsky and Roee Sarel, the behavior of the crypto market is a valuable indicator of the systemic risk of the traditional financial system.

The report outlines a scenario in which the bitcoin industry and the traditional finance world become even more involved. At that time, financial institutions run the risk of collapse. That in turn can create a domino effect.

“In a nutshell: According to our findings, investors see the crypto market as a replacement for the traditional market in times of crisis. Regulating that market can prevent systemic risks for the 'real' financial market. ”

New world vs old

One of the ways to keep traditional financial markets in the saddle is to heavily regulate Bitcoin trading. Especially during a period of crisis, the reins need to be tightened to prevent an escape from this new world.

Benefits

However, the researchers also warn against taking such strict measures. As an example, the cessation of the stock markets is cited. In recent weeks, the world has been turned upside down, which has caused cracking systems.

Regulators need to be careful about undermining the benefits of the bitcoin market. The open and global character offers (and of course) also advantages in times of crisis.

Bitcoin's network is 24/7. You can always do a bitcoin transaction, which cannot be canceled. A central bitcoin exchange is, but trading can always take place on the network.

The researchers therefore conclude that completely stopping crypto markets is a "mission impossible".

Thoughts all? Can Bitcoin and Traditional Financial Markets Coexist?

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Resources

https://www.law.ox.ac.uk/business-law-blog/blog/2020/04/how-market-cryptocurrencies-affected-coronavirus-and-why-should-we

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MichDon

Crypto entousiast, father, taekwondo

MichDon

Crypto-enthousiast dad with an aim to try to inform readers of new and interesting projects, upgrades and updates to projects and of course any news of interest on the Crypto spectrum.