The cryptocurrency markets recorded record volumes in 2018

Article by CNN:

Throughout 2018, over $3.1 trillion worth of Bitcoin payments were processed on the public blockchain network.

The high on-chain transaction volume of the dominant cryptocurrency has demonstrated the efficiency of the asset as a cross-border payment tool and as an alternative to existing settlement systems for international payments.

Is Bitcoin a more efficient type of Gold?

Often, Bitcoin is compared to gold as a store of value and a medium of exchange. Both assets are unaffected by the performance of traditional financial markets and are generally not correlated with traditional investment vehicles.

But, a case can be made that Bitcoin is a more efficient version of gold because of its ability to operate as a medium of exchange and a cross-border payment tool.

In November 2018, Binance, the world’s largest cryptocurrency exchange sent $600 million with a $7 fee, processing well over 106,000 Bitcoins within one hour.

For a similar amount to be processed using gold or traditional financial services, third party service providers and regulators have to be involved, resulting lengthy paperwork and compliance-related activities.

The efficiency of dealing with large transactions and cross-border transactions has allowed the Bitcoin network to reach a volume of $3.1 trillion last year, recording a year-on-year median increase of 2.91 percent.

Researchers say: "Comparing Bitcoin’s overall performance in 2018 to prior years: – Total trading volume: $2.2 trillion – Total Layer 1 transaction volume: $3.2 tn – Total change in transaction volume 2017-2018: -8.23% ($0.3 tn) – Median change year-on-year 2017-2018 for every day in the year: +2.91%."

The $3.2 trillion transaction volume of Bitcoin does not include the over-the-counter (OTC) volume, which is said to be larger than the volume of the forex market.

Not everyone believes in Bitcoin

Speaking to Bloomberg, Huw van Steenis, the senior adviser to Bank of England Governor said that cryptocurrencies like Bitcoin fail basic financial service tests.

With an emphasis on the bright future of the fintech sector, the advisor had this to day: “I’m not so worried about cryptocurrencies. They fail the basic tests of financial services. They’re not a great unit of exchange, they don’t hold value, and they’re slower.”

However, the claim that cryptocurrencies are slower in processing transactions in comparison to traditional financial services is highly false.

Settlement systems such as the SWIFT network requires a minimum three to four business days for international wire transfers while Bitcoin and other major crypto assets typically can settle payments within one single hour.

Previously, upon the resignation of Swift CEO Gottfried Leibbrandt, it was revealed that the SWIFT network relied on its system build 40 years ago that presents various vulnerabilities and inefficiencies in the process of settling payments.

“Swift is in very different shape than it was seven years ago. There’s always going to be a time to hand over the reins and write a new chapter. I think this is indeed the right time,” Leibbrandt said at the time.

With capital controls in many regions that disallow the outflow of gold and fiat with heavy restrictions, in the long run, Bitcoin could appeal to a wider range of investors as an efficient medium of exchange.

However, Bitcoin mining revenues have gone down drastically last year as well... And, the Bitcoin has been the subject of recent attacks.