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Blockchain and cryptocurrencies have come a long way since the first creation in 2009, and El Salvadors adoption of Bitcoin as a legal tender has been a strange and unexpected move, but does this mark the beginning of the end for traditional currencies? Pavel Matveev, CEO and co-founder of blockchain-based payments platform Wirex, shared in an exclusive interview withExpress.co.ukwhat the future holds for cryptocurrencies and how regulation is changing this form of finance.

Speaking about El Salvadors radical move toward Bitcoin, Mr Matveev said he does not believe this ideal will be taken up by other countries: No, it wont happen any time soon. I dont think other countries are ready to do the same. When you talk about countries and governments' perception of cryptocurrency I think its worth mentioning that a lot of countries are trying to come up with regulatory framework for digital currencies.

He said a year or two ago, in the world of digital crypto "there was no regulation and the trend started in Japan; it was the first country that started to regulate cryptocurrency".

Japan quickly began regulating cryptocurrency as when crypto trading first started, it was known as the country with some of the biggest cryptocurrency hacks.

Introducing the licencing and regulation enables more protection for customers, but it is not the end-all for hacks and scams.

Big scams arent happening that often, but there are a lot of retail investors still being scammed. Mr Matveev commented that people are right to be fearful, but must understand that cryptocurrency security has come a long way.

Theres a lot of scam artists in the market and a lot of people hearing stories of people who have been hacked and lost thousands of pounds, it is quite scary.

Back in the days, news about Bitcoin was about ransom, money laundering, selling drugs and weapons. We still see a lot of negative stories because thats what attracts traffic, but now for sure its more neutral.

He also noted that the UK is quite ahead of some countries in terms of regulation, as the FCA already has registers for permanent and temporary licensed cryptocurrency-related companies.

Mr Matveev added: In the UK, theyve started applying regulation for companies providing cryptocurrency-related services. Regulation is a big topic in the United States at the moment, and you can tell this trend started in developed countries. I think it will continue to all other countries as well.

All cryptocurrency businesses in the UK have to be registered by the FCA. Because its not regulated, if you are scammed the only thing for you to do is go to the police. The best protection from being scammed is to prevent being scammed.

Check the register of cryptocurrency companies on the FCA website, there are permanent and temporary lists but if you work with one of these companies you should be much much safer than companies not on either list.

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This growing trend of strict regulation does make it safer for customers, but also may have an adverse effect on the market.

My first point is that regulation will make the market safer and expand it to more people. In my view it will help with adoption.

The second point is that in short term it might have a negative effect on the price and volatility and some companies will find it very challenging to comply with the requirements.

You will never know when this negative effect will start or when it will end. Based on price history there is always ups and downs but if you look at the bigger picture it is always going up, so whether you invest now or invest later, long-term the price will go up.

When it comes to crypto-investing, the general outlook is that it is too volatile. However, as Mr Matveev explained, this is only true for the short-term and ultimately depends on what the tokens will be used for.

At the moment there are over 5,000 digital cryptocurrencies, I know it can be quite scary but the thing about cryptocurrencies and why someone may consider using them as an alternative investment is that mid-long term price is going up, Mr Matveev began.

It is usually advised that before investing, one must consider why they are investing in order to find the right investment to match the return they desire.

One further common piece of advice is to thoroughly research all of ones options before putting money in, and with cryptocurrencies this can be overwhelming for first-time investors.

There are a lot of cryptocurrencies and the reality is there is different use cases for different currencies, he said.

A use case is essentially what the token or coin can be used for once bought, Mr Matveev continued: Some like Bitcoin are usually compared to digital gold so theres a stored up value. Some of them can be used in payments as a stable value currency, in the industry its called stable coins.

Cryptocurrency is volatile, this is the perception that people from the general crowd have is that Bitcoin is too volatile. If you look at it short term yes it can be quite volatile but if you look at a bigger time scale digital currencies are going up.

But investors must also not feel pigeon-holed to the well-known coins like Bitcoin and Ethereum.

Everyday there are new cryptocurrencies being added. Sometimes I just look at the list and start getting scared. I think there are too many to be honest. The industry is growing, the market is growing. Its not investment advice but in the current environment after Covid when governments started printing a lot of money, having an alternative investment is a wise choice.

Again, this is not financial advice, he noted.

If you go on a coin analytic website, stick to the top three, top 10, top 20, it will give you an indication of how big or stable a coin is. Have a look at the use case, some will go for higher growth, others will have different perks, Mr Matveev suggested.

A fixed market, like traditional currencies, doesnt have much movement. A lot of people criticise cryptocurrency for being volatile but on the other hand volatility brings interest and returns.

The industry has so much potential, but when people talk about mass-adoption I think its too early still, he concluded.

Read more here:
Cryptocurrency 'industry has so much potential' what you need to know about crypto - Express