Crypto-Licencing Basics: 5 Reasons Why We Need Them

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Fear crypto-licencing?

If yes, fear no more. There are many misconceptions surrounding this concept. And we’ll dispel them below…

How So?
Crypto licencing is inevitable in the cryptocurrency world. Without licenses, expect many governments to ban Blockchain…

This licensing allows for the regulation of “Blockchain transactions.” And it has many long-term benefits for the wide market…

For example…

1. Less Incidences of Incompetent Businesses

Throughout the past few years, many startups have used Blockchain to get funds.

They’d launch an ICO. From there, they’d collect funds through social media, events, and seminars.

And doing so was advantageous.

It meant less regulatory paperwork, and lower costs. It also meant that projects could commence without waiting months for approval.

However…
Ease of funding brings bad business to the surface.

And here, we’re not just looking at scammers. We’re looking at business that promise much, but lack experience…

They might be good at marketing/presenting themselves. But their processes might be not well thought out.

With licensing, businesses are forced to think twice before raising funds. Because they’d need time to do so…

Also, with licensing, raising funds forces ICOs to find a regulated exchange. And there, judgments are harsher than controlled seminars and social media pages…

But speaking of exchanges…

2. Licensing Eliminates Incompetent Exchanges

Exchanges are meticulous services.

They have many responsibilities. For starters, they need to ensure a secure environment of exchanging currencies/joining ICOs…

This means that client accounts should be safe from hack attacks.

Additionally, there’s the information requirement. A good exchange is always updated, and is real time.

Not to mention, their portals should be designed for easy use. And they must avoid money laundering…

How to Ensure the Previous.
This is done through licensing.

Licensing checks an exchange for competence. It ensures it’s managed by individuals with experience running brokerage operations…

Also, licensing has heavy costs.

Depending on the country, licensing can cost 6-7 digits to setup and run (per year)…

Only serious exchanges will take on the responsibility of hosting good ICOs. And this is a time-saver for any researching investor.

3. The Possibility of a Banking System

Isn’t that what cryptocurrencies lack?

They lack banking structures. They lack a place where you can open an account, sign checks, save money, and finance your business…

With licensing, “crypto-banking” becomes a possibility.

Licensing allows regulators to setup requirements on how acceptable Blockchain banks should operate.

It sets up an accountability system, ensuring that the bank is profitable without taking excess risk.

Blockchain in Business Financing.
But even better, it brings Blockchain into all industries. So now cryptocurrencies aren’t just restricted to the financial world.

This lets any business easily get paid in cryptocurrencies. They can accept payments to verified banks.

Or, they can pay bills/supplies with their accounts!

And this has many benefits. After all, the acceptance of cryptocurrency by businesses encourages consumers to also use it.

And this means…

4. More Participants & Liquidity

Cryptocurrencies lack an important element. That is, they’re not stable structures.

Throughout the past few years, we’ve seen them in boom/bust cycles. And this has created an odd perception of them…

Investors hold onto them in hopes of higher appreciation. They treat them like expensive assets, instead of currencies…

What a Currency Should Be…
First, it’s a medium of exchange. So it needs to be stable in price, and without violent fluctuations.

Licensing ensures this happens. After all, it makes the average consumer feel safer participating…

And with more businesses joining in, this creates additional incentive. So more join in, and this creates more volume and liquidity…

And this additional liquidity slowly stabilises prices.

5. Less Currencies

An odd benefit, but it is an advantage.

There are dozens (if not hundreds) of crypto-tokens floating around. And it’s hard keeping track of them all, plus their values…

So “establishment cryptocurrencies” are needed.

Licensing makes that a reality. With more people gravitating to cryptocurrencies, there’ll be a need for commonly used mediums.

So expect a few currencies to stay around!

Licensing – What Blockchain Needs.
Licensing doesn’t centralize cryptocurrencies. Nor does it allow government control.

It simply adds security and structure. And for cryptocurrencies to be trusted long-term, this is exactly what’s needed!

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