The last six weeks have seen the total market cap of all cryptocurrencies nearly double. After reaching a high of $2.5 trillion earlier in the year, the market cap had retraced to just $1.2 trillion. After a steady rise the entire cryptocurrency market is currently worth 2.3 and is fast approaching its all time again.
The huge increase in market cap over the last year has been driven by many different factors. One factor that has certainly had a major influence is the arrival of institutions into the crypto sphere. In addition to Tesla (NASDAQ:TSLA)'s massive acquisition of Bitcoin, we've also seen huge purchases of Bitcoin by Blackrock (NYSE:BLK) and Microstrategy (NASDAQ:MSTR). In addition to these, PayPal (NASDAQ:PYPL) and Square are also developing ways to implement crypto payments into their service.
The interest from these institutions has given crypto a legitimacy that it did not have before and has certainly made it more attractive to many investors. However, large financial institutions still remain very wary of becoming too exposed to cryptocurrencies. Firms like JP Morgan, while they have begun to come round to the idea of crypto, still remain sceptical. If crypto’s bull run is to be maintained and the market cap to reach new heights, investment from these kinds of firms will be vital.
Anonymity In Crypto
Issues such as these have no doubt contributed to crystals less than stellar image in the eyes of a lot of big institutions. Another issue with anonymity in crypto is that it gives digital assets a huge degree of inflexibility in terms of how they can be utilized. If an asset is tied to a person or investment firm they can use that asset as collateral to secure loans or to avail of other financial instruments. Without legal proof of ownership digital assets can generally only be used as collateral when locked in smart contracts and therefore can only be used to secure digital loans.
TransitNet And Title Registry
There is a solution to this issue. That solution is title registry and it's being developed by a project known as TransitNet. TransitNet provides tools that can be used to verify the rightful ownership of cryptocurrencies and turn digital assets from a bearer asset to a registered asset. Owners of cryptocurrencies can use a third party registry to prove their ownership of their wallet and protect its contents. This proof can be used even in the event a private key is lost or stolen. Essentially, investors are voluntarily giving up their anonymity for more security over their own wallet.
Fund Administrators, Crypto Exchanges, Autotors, Custodians, and Insurers can use these tools to verify the funds they have in their portfolio. Having this verification opens up a huge amount of options for how the assets can be utilized financially. For example, title registry creates the potential for crypto to be used as collateral to secure loans and (especially significant for institutional investment) leverage for trading. Crypto can then be used to secure funds to invest in traditional projects.
With title registry, institutional investors are more easily able to integrate their crypto assets with their traditional assets. Without third-party verification, it is difficult to utilise crypto off-chain which would make it unique within a large investment firm’s portfolio. Because of this, the flexibility afforded by title registry is likely necessary for many firms to get seriously invested with crypto. Now they have the opportunity to do just as much with their crypto investments as they do with their legacy investments.
TransitNet has already secured $2 million worth of investment from a seed round. In addition to that, the project has received prior investment from blockchain investment firms as renowned as BKCM, ALPHABIT and Kenetic Capital, demonstrating the potential this project has.
Without title registry crypto assets do not have the flexibility required to be fully utilized by investment firms. This is why the work TransitNet is doing is so significant. It’s these kinds of projects that will make the whole ecosystem more attractive to institutions and, in turn, provide the fuel to maintain the bull run.