A wrap-up of the biggest news in cryptocurrency for the week
World Governments Finally Recognizing Bitcoin
Japanese Government makes unprecedented move with BTC
Japan is leading the way in the federal recognition of bitcoin by declaring it to be a “prepaid payment instrument,” or pretty much the closest thing to “money” any world government has passed into law. The bill attempts to simultaneously regulate and legitimize all digital currencies, allowing them to be more closely monitored and taxed by the federal government, as well as easier to use for both customer and merchant.
It’s not too surprising that Japan is the first country to enact such laws (which went into effect on April 1st), given the fact that it headquartered infamous bitcoin exchange MtGox in Tokyo before it went under amidst speculations of massive fraud headed by then-30 year-old CEO Mark Karpeles.
The downfall of MtGox proved to be a warning of the dangers of perhaps too much freedom and deregulation; thieves may not be as closely monitored as they should, and thus the Japanese government’s trailblazing efforts to curb potential bitcoin fraud through regulation are not by any means surprising. Comparatively speaking, a flood of merchants already accept bitcoin as payment in Japan, making it one of the most bitcoin-friendly countries in the world.
Russia, Australia & others to follow suit
Although there have been several attempts to ban cryptocurrency in Russia since 2014, a public announcement made by Russian Deputy Finance Minister Aleksey Moiseev earlier in the week signaled Russia may adopt their own federal regulations and acceptance of bitcoin as a legitimate currency. This move comes as an attempt to stem the tide of money laundering and fraud being committed through bitcoin as well as bring some sort of standardization to its relatively massive user base.
Not everybody is on board with Russia’s legalization of bitcoin. Some banks are pushing back against the complex task of implementing cryptocurrency regulations, while others are urging the government to decide if digital currencies are an “asset, cash or security” within the next few months. More federal funding to fight cryptocurrency crime would mean the development of more advanced means of tracing cybercriminals through the blockchain, thanks to a new field of science and detection known as blockchain forensics. The overarching effect of deployment of these mathematical detectives could prove beneficial for deterring would-be con artists and stemming illegal trade in a country already notorious for financial fraud.
Another country that recently announced plans for official governance of bitcoin and blockchain technology is Australia, where a double-tax on bitcoin has existed since 2014. Because bitcoin has never been officially recognized as “money” in Australia (along with most countries), it faces both exchange to fiat and goods and services taxes, according to Australian federal tax guidelines. In March 2016, the Treasury Department of Australia issued a statement promising to address the double taxation issue. They also accepted papers and presentations from the public on how to best govern digital currencies and employ the use of blockchain technology in education, finance and government. More recently, a paper published by the Reserve Bank of Australia this week details the government’s approach to promoting public awareness and education of blockchain technology. They hope to promote a “FinTech-friendly agenda” to the general population, encouraging the public to approach the government with ways to use blockchain technology to solve complicated problems of modern welfare and society.
Other countries looking into formal regulation of digital currencies include India, where the government is taking initiatives to legislate bitcoin for anti-money laundering and consumer protection services. Though not formally endorsed by the government, bitcoin investing and use is also picking up in Venezuela. As the local currency becomes even less stable – due not only to deep-seeded, vast government corruption but also worries of out-of-control inflation – the Venezuelan bolivar is frequently more volatile than even bitcoin (which as far as tradable currencies go, is quite a feat). For Venezuela and other countries whose national currencies face massive, uncertain price swings, in the time of civil, domestic or financial unrest, bitcoin’s mathematical impossibility of hyper-inflation and proven stability can make it often seen as a “safe haven” investment, similar to gold or other precious commodities.
The Rise of BTC in the Online Gaming World
According to bitcoin casino checker Bitcoin Casino Statistics, the world has spent over $4.5 billion in bitcoin casino and other online wagers since 2014. This translates to roughly 3.13 BTC per minute in this time period, which is a decently competitive fraction of the online gambling market. The total online gambling industry in the U.S. is projected to be a whopping $50 billion in 2017, with the industry market share most likely to continue shifting its trend towards cryptocurrency-based games.
Even though people often throw around the terms “digital currency” and “cryptocurrency” like they mean the same thing, hard core enthusiasts will know that it’s the blockchain that separates crypto from everything else that is digital money. Even without the legendary security of the blockchain cryptography software that makes bitcoin as trustworthy as it is, certain digital tokens that employ other methods of security have managed to maintain surprisingly stable values. A niche of online multiplayer games (think MMORPG like WarCraft or virtual reality simulators like Second Life) have their own in-game currencies which are interchangeable with other digital monies, and even PayPal — and thus their prices are made stable through heavy trading volume, largely due to their use as intermediary pathways of exchanging bitcoin (or other digital currencies) to real currency (aka fiat currency).
What makes popular in-game currencies like Second Life Lindens or WarCraft gold so special is that they make it possible to perform various methods of money transfer using the currency of these virtual economies that may otherwise be restricted by local area or federal regulations. Linden Labs recently noted that game user profit from private Lindens sales was now near neck-and-neck with total in-game revenue collected by Linden Labs. Critics of exchanges that provide these specialized types of services point out obvious opportunities for money laundering, counterfeit, as well as outright swindle; a common opinion being that virtual economies themselves may be subject to federal scrutiny in the not-too-distant future.