MSFT & Nasdaq: Evolution Unfolds in the Crypto Ecosystem
November 12, 2018, 10:03:26 AM EDT By TipRanks
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The cryptocurrency market is rapidly changing; it’s in a phase that evolutionary biologists call “adaptive radiation;” when species expand and proliferate rapidly, filling up all of the environmental niches while they are empty. The pace of new cryptocoin offerings, and the number of cryptos available for trading, are typical features of this phase. The changes are not limited to the number of online coins, however.
Two established companies, Microsoft and Nasdaq, are moving to enter the blockchain trading space, bringing established software and financial savvy into crypto’s Wild West. Let’s start by looking at developments in the cryptocurrency world.
Making Connections in Online Trading
The crypto space is buzzing following Microsoft (MSFT) and Nasdaq’s (NDAQ) announcement that they are entering a partnership on a blockchain system. The two companies will be integrating Azure blockchain services with the Nasdaq Financial Framework (NFF). It’s a partnership that will bear close watching – Azure is a leader in cloud software services, making computing activity easier for customers, while NFF was specifically devised as a system to facilitate trading between and among different financial platforms.
In the words of Magnus Haglind, Nasdaq’s Senior VP of and Head of Product Management, “Our industry is evolving faster than ever with the advent and advancement of cloud, blockchain, machine intelligence, and others. Key players in the industry are looking to these technologies to explore how they can become more effective and efficient, but also gain competitive advantage.”
Both companies have pointed out that the new collaboration will make it easier for buyers and sellers to connect with each other, and to manage the delivery, payment, and settlement aspects of their transactions. Nasdaq also plans to use Microsoft’s enhancements of the NFF to allow customers on different blockchains to use a common interface, further facilitating crypto trading.
Faster transactions, with clearer communication and everyone on the same interface, will- it’s hoped- speed up crypto’s acceptance and adoption as an online trading token.
Stablecoins
Meanwhile Circle, the online peer-to-peer payments platform, is preparing to launch a blockchain currency, based on the stablecoin concept. CEO Jeremy Allaire says, “I don’t think in five years people will be calling them stablecoins.” Stablecoin is one of two new developments in crypto, and while they are not directly connected in the designers’ intentions, a look at both brings up some intriguing possibilities.
The stablecoins are blockchain based cryptocurrency trading tokens, but with a difference: they are pegged to some outside store of value to prevent the price swings to which Bitcoin and other cryptos are prone. The peg is intended to make stablecoins a more reliable trading unit, taking advantage of the security offered by cypto’s blockchain technology.
Josh Fraser, co-founder of the crypto trading start-up Origin Protocol, sums up the chief problem in cryptocurrency trading with wit and brevity: “I don’t know whether the price of that crypto is going to go up or down, but it’s almost certainly not going to be the same as it is today.”
Stablecoin is an attempt to solve that problem. The concept started with Tether (USDT) back in 2014, and over the last year, a handful of the new stablecoins have been launched or announced, among them Havven (HAV), Dai (DAI), and Paxos (PAX). The new coins are notable for their extremely narrow trading range, and their collateralized nature. Tether, PAX and DAI are all pegged to the US dollar, with Tether and PAX requiring one-to-one backing for all coins issued. HAV is backed by the trading system’s transaction fees.
At first glance, stablecoins may seem less desirable than the original cryptos, Bitcoin and its ilk. Their value is constant, usually pegged to the US dollar at a one-to-one basis, so they are less likely attract speculative traders, but that same stable value gives them – by design – great potential as an online currency.
Keeping all of that in mind, let’s hear the rest of Circle CEO Jeremy Allaire’s comment about stablecoin: “It’ll just be ‘money on the internet.’”
A Look into the Future
All of that was prelude. It’s time for another connection, and a leap of imagination.
The combination of fast, easy, and secure blockchain transactions, even between different networks, with stablecoins linked to tradition money and backed by the credible banks, is the final step needed to make cryptocurrency transactions accessible to the wider public. Once crypto is as easy to use, and as reliable, as Netflix or Amazon, it will gain wider trust and acceptance.
The future is coming on fast, and it’s getting easier than ever to imagine. The tools at CoinWatch will make it easy for you to follow the cryptocurrency market action as it develops.
Author: Michael Marcus
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
