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Crypto enthusiasts are blaming the US government for the challenges posed. However, there is also another side to this story.
The future of the cryptocurrency industry is still being determined due to challenges posed by the American legal system. The industry, which claims that it is all about innovation, needs to grow because of specific regulations by governments worldwide. Now, what is the actual reason behind all these regulations and bans? Is it the control obsession of the government or just an act to protect retail investors?
Who is Right? The Government or Crypto?
According to crypto enthusiasts, the Securities and Exchange Commission (SEC) is one such regulatory body trying to control a technology they hardly understand. However, the traditional financial world, which relied on intermediaries, is now being overtaken by a technology that enables direct transactions between individuals.
However, there is another side to that as well that many of the overly excited crypto enthusiasts miss. The government cannot just accept any new tender that gets away with the name of ‘technology.’ SEC has strict rules, and it likes to keep control of any medium of exchange, whether be a currency or any security like bonds, stocks, etc.
Research reports worldwide show that the crypto world is a whole of scams. One of the articles by Coindesk shows that cryptocurrency users lost nearly $2 billion to scams in 2023 alone. These reports prove how government regulation is essential when dealing in such markets. On the other hand, even prominent corporate leaders share their views.
What do Corporate Giant CEOs think of Cryptos?
“The governments around the world like to know where the money is and who has it,” -Jamie Dimon, CEO of J.P Morgan, spoke in an interview. He added, “There is a use case for Bitcoin, if you live in Venezuela, North Korea, or you are a criminal, If I were the government I would shut it down.”
While crypto enthusiasts often criticize people like Jamie Dimon for not having “Tech Knowledge,” Bill Gates, the founder of a billion-dollar tech company, Microsoft, also shares the same views on cryptocurrencies. During an interview, Gates acknowledged that blockchain technology is a positive development for sharing databases and verifying transactions.
However, he also agreed that bitcoin and ICOs are speculative investments with no intrinsic value and that their success relies solely on the “greater fool theory” – where people buy in, hoping to sell to someone else at a higher price.
One of the greatest investors of all time, Warren Buffet and Charlie Munger, had no different views on the crypto space. In an interview with CNBC, Buffet said there is undoubtedly a lousy ending awaiting the crypto space, as it has no underlying value. Charlie Munger, on the other hand, referred to virtual currency as “worthless.” During the annual shareholder meeting of the Daily Journal Corporation.
The Major Downside With Bitcoin And Crypto
Bitcoin has several inherent flaws that are part of its design and cannot be easily changed. For instance, the public ledger, or blockchain, means that every user can see every transaction.
Semi-anonymity is a feature of Bitcoin wallets, but identifying the owners of these wallets is not straightforward, which may not be desirable for specific users. The public blockchain is shared with all users, which makes it vulnerable to attacks due to easy access.
In addition, the Bitcoin network has been subjected to multiple “stress tests” that were essentially DDoS attacks. Exchanges and miners launched these tests to prove a point about Bitcoin’s design: the network cannot handle high transaction rates.
Moreover, the fact that the participants of Bitcoin’s operation can bring the network down to prove a point is an unfortunate design feature of the code. In addition, these two aspects of Bitcoin’s design are integral to its operation and cannot be changed, and adoption by reluctant users must be despite these attributes.
The Questionable Future of Bitcoin
Bitcoin has developed a questionable reputation in recent times. Furthermore, Silk Road was an online marketplace that operated in the dark net, allowing thousands of drug dealers and nearly a million customers to make illegal drug deals. All the transactions were conducted with Bitcoin. And the reason? Because it is unregulated and not semi-anonymous.
On the other hand, people want criminals to face justice, so the semi-anonymity attribute of Bitcoin seems harmful to law-abiding citizens. Additionally, without positive marketing toward the value of semi-anonymity for regular users, the general user base may think criminals only use cryptocurrencies.
Cryptocurrencies have also developed a reputation for having questionable security. Mt. Gox, the world’s primary Bitcoin exchange, went bankrupt after hackers robbed it in 2011 of approximately 460 million USD.
The CEO and main programmer, Mark Karpeles, was not using version control for new code. He also allowed bug and security fixes to remain unaddressed for weeks, which allowed hackers to steal Bitcoin from the exchange.
This breach significantly reduced Bitcoin’s value as users sold their Bitcoin for fear of it being stolen. Ethereum, another form of digital currency, recently suffered a similar theft to a 50 million USD hack.
Moreover, These hacks are generally targeted at large holders of cryptocurrency who need to keep their security standards up to date. They are the main reason these currencies’ value plummets and do the most damage to the image of crypto. Only when future organizations that exchange cryptocurrency understand how security flaws can lead to these attacks will these events continue to hinder adoption.
Summary
The cryptocurrency industry faces challenges from the American legal system. The Securities and Exchange Commission (SEC) is a regulatory body that must understand the technology. Reports show that the crypto world is full of scams, and Bitcoin has a questionable reputation.
Disclaimer
The views and opinions stated by the author or any people named in this article are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks, cryptos, or other related indexes comes with a risk of monetary loss.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
