January 2018 certainly has been a hard month for Cryptocurrencies. Bitcoin has fallen in value from $13,412 to $11,164, as of January 19th, since the start of the New Year. China has increased regulation of cryptocurrencies again, and recently, leaders of Germany and France are holding discussions to regulate Cryptocurrency heavily, which seems like a potential threat to all Cryptocurrencies! Meanwhile, on January 13th and 14th, yet another high-profile Cryptocurrency theft occurred, this time in the crypto denomination of Lumens to the value of $400,000 from the application BlackWallet. What is going on?
Bitcoin’s Price Drop
Whatever happens to the price of Bitcoin, other Cryptocurrencies tend to follow with. This is because Bitcoin was the first Cryptocurrency to be invented, and most wallets use Bitcoin to buy and sell Cryptocurrencies of other denominations. In December 2017, many articles were published about how Bitcoin was a bubble, in that it would be sure to pop sometime soon. On December 16th, Bitcoin reached its all-time high of $19,343. When the price ascends as rapidly as that, it can certainly make peoples’ fears of losing money ascend, and fear is a big driver of the Cryptocurrency market, along with hope and optimism. In other words, people’s emotions about how Bitcoin and other Cryptocurrencies are likely to behave can actually affect how they do behave, and then create a snowball effect.
Increase In Regulation Internationally
Some sites are reporting that China has banned Cryptocurrencies. They have not; but in recent times the Chinese government has announced an intention to create their own Cryptocurrency in their central bank, and have begun to follow up on social networks with peer-to-peer Cryptocurrency trading, including Telegram, QQ, and WeChat. They have also begun shutting down Chinese firms registered with the intention of assisting Cryptocurrency trade internationally and domestically. Overall, it seems that China’s intention is not to ban the technology outright, but to develop a far greater scope of control over them.
Meanwhile, Western countries like France and Germany have recently decided to push for global regulation of Cryptocurrency, claiming that this will help prevent money laundering, tax evasion, and terrorism.
Currently, the only countries to have banned Cryptocurrencies outright are Nepal, Bangladesh, Kyrgyzstan, Ecuador, Bolivia, and Algeria.
Overall, it looks as though regulation is going to increase substantially over the next few years.
Theft Of Cryptocurrency
Over the previous weekend, Cryptocurrency was stolen again, this time from BlackWallet. ZDnet’s staff writer referred to this as “Another day, another theft in the world of Cryptocurrency wallets,” suggesting that Cryptocurrency threat is actually quite common. According to The Baltimore Sun, in total, a full fourteen percent of Cryptocurrency ever created has been stolen, which is worth $1.2 billion overall, and further, up to $11.3 billion in potential tax revenue has been lost.
For these reasons, increased regulation may not be the end of the world for Cryptocurrency, but rather, a new phase. Perhaps a little less Wild West and a little more civilized? Increased regulation is not the same as an outright ban, and with regulation may come greater adoption, better prevention against thefts, and better understanding by people about what Cryptocurrency is all about.
Therefore, it may be alarmist to suggest that the recent notice taken by leaders and governments of Cryptocurrency will destroy its value, and a more cautious statement would be that we need to wait and see what regulators will do before deciding to be pessimistic or optimistic about Cryptocurrency.