The end of 2022 saw a major downfall in overall trust for a number of major cryptocurrency and fintech firms, especially in the aftermath of the FTX collapse and Bitcoin’s price falling below the symbolic $20,000 for the first time in years.
Even though the blockchain and crypto industries have been around for more than 10 years, their acceptance and overall adoption was hit once again by a number of obstacles. In recent days, the collapse of the Silicon Valley Bank and Signature Bank have sent crypto markets into a frenzy, leaving fintech and crypto firms with lingering worries on how their firms can succeed in 2023.
Despite major crypto adoption, one of the biggest challenges crypto firms must still face in 2023 is how crypto regulations will unfold this year. The regulatory landscape for cryptocurrencies is still evolving, and there is significant uncertainty about how different countries and jurisdictions will regulate cryptocurrencies. This creates challenges for firms operating in the industry, particularly as they try to expand globally.
Security risks are also one of the major challenges faced by crypto and fintech firms worldwide as they are vulnerable to various types of cyber attacks including hacking, phishing, and malware. This was something the already bankrupt crypto exchange FTX fell victim to as it said in January 2023 that $415 million worth of crypto assets were hacked from the exchange’s accounts. Moreover, the increasing value of cryptocurrencies is likely to make such attacks more sophisticated and frequent, posing a significant threat to firms and their customers.
Moreover, as the use of cryptocurrencies continues to grow, there are concerns about the ability of existing blockchain networks to handle large volumes of transactions. This could lead to delays, high fees, and other issues that could impact the user experience and hinder the adoption of cryptocurrencies.
To top it all off, even though cryptocurrencies continue to grow in popularity, many people remain skeptical or distrusting. This is mostly triggered by the lack of education around how cryptocurrencies work, which is why it is so important for up-and-coming fintech and crypto companies to continue to educate users and the general public about crypto currencies and their potential uses, and address any concerns around security and regulation.
These challenges make it obvious that new companies are finding it increasingly difficult to enter the market. Starting a crypto or fintech company is more expensive than ever before, which can intimidate investors and entrepreneurs alike.
When I set out to create Gamdom, I wanted to merge two very challenging industries—crypto and gambling—and we have been lucky, as Gamdom has been experiencing success and rapid growth. Having recently hit 10 million global users and hiring sporting legend Usain Bolt as an ambassador, we’re set to grow even more in 2023 and 2024.
Although it would be overly confident to say that Gamdom was not affected by the setbacks in the crypto industry that came with the downfall of FTX and other obstacles, we were able to bypass them quite smoothly.
Many in the industry will say that the best way forward is to time launches and releases in accordance with market conditions. However, at the risk of sounding controversial, I believe that that is exactly the thing many crypto and fintech companies should be avoiding. The reason behind this is quite simple: While everyone is doing the same thing at the same time, you can distinguish your company by doing something different and unique, which is I think what has helped us distinguish Gamdom from its competitors.
Either way, markets, especially crypto markets, are very volatile, so timing your launches and plans in accordance with their performance is an overall risky move.
Another thing that will come in handy for crypto and fintech businesses are stablecoins, digital assets designed to maintain a stable value relative to a specific basket of assets like fiat currencies (oftentimes the U.S. dollar). Their utility is especially important during volatile times since they are able to provide stability and predictability while also enabling seamless and efficient transactions.
Focusing on stability is also something crypto and fintech companies should look into. The recent Silicon Valley Bank debacle, which saw the $USDC stablecoin briefly lose its peg with the U.S. dollar—as Circle said that $3.3 billion of its cash reserve was with the bankrupt bank—is a great example of why crypto and fintech companies should make sure to spread their portfolio and assets so that they maintain stability.
Overall, developing innovative technology and compliance with regulations can also help both crypto and fintech companies succeed in the future. Collaborations with other companies and organizations can also help crypto firms expand their reach and credibility as well as gain access to new markets and customers.
I do not think that crypto and fintech companies need any more reassurance that 2023 might be a good year; I am quite bullish for crypto and fintech going forward. After all, the winter must end sometime.
Felix Römer is the founder of the online crypto gambling platform Gamdom.