A wrap-up of the biggest news in cryptocurrency for the week
A Wild Month in the World of Bitcoin
Bitcoin firmly on the radar of the Wall Street
The last month has been somewhat historic in the saga of bitcoin: new price highs have been happening on the regular, several governments recently announced plans to place formal regulations on bitcoin and all the while, bitcoin core is still undergoing a bloody civil war with Bitcoin Unlimited (although it would appear that support for Unlimited may be tapering off).
As world awareness, acceptance of and demand for bitcoin has been rapidly increasing in 2017, major investors have been claiming multimillion dollar stakes in cryptocurrency, with some financial analysts now touting bitcoin as a safe-haven investment. Analysts at NASDAQ have even issued their own guide to investors about their take on cryptocurrency, which is for the most part quite positive. Some pink sheet “penny” stocks have even started incorporating cryptocurrencies into their business/investment models. These proclamations act as a potential market signal that bitcoin’s price may further be on the rise, and that the financial world might finally be adopting bitcoin as a legitimate source of value.
As the heat turns on, the community comes to a boil
The Core vs. Unlimited debate is a philosophical one: in the face of ever-increasing usage and transactions, how do you best adjust the bitcoin program to scale, or to meet the growing size of its user base and demand? We tackled the various proposals in a previous roundup, but no doubt problems remain, as bitcoin fees and transaction times continue to rise. Another tricky and oft-overlooked point to consider is bitcoin’s ability to remain as decentralized as possible. If certain entities working on behalf of corporations or state governments were secretly working to push for change in the bitcoin software in a way that would favor themselves, this would most certainly undermine Satoshi Nakamoto’s core belief of decentralization.
Original bitcoin Core developer Jeff Garzik is of the opinion that Bitcoin Unlimited should not go through because it was proposed outside the traditional consensus-based approach that has guided the development of the bitcoin software for several years. will undermine the legitimacy of bitcoin if it were to succeed because it would place even more power in the hands of the miners, which could then use their collective success to further centralize the mining process in their favor. Bitcoin developer Andrew DeSantis had much harsher criticism for Bitcoin Unlimited, comparing it to the unfair (and at times brutal) financial system that Satoshi was so desperately trying to unwind:
“It would be no different from the old banking system but instead of being powered by high-frequency traders in New York City, it would be powered by high energy-consuming miners in China.”
Altcoins starting to make dent in crypto scene
The need to facilitate secured trades from various cryptocurrencies to fiat currency is already being looked into by novel crypto-exchanges, many of which use their own tokens to make currency exchanges faster and cheaper than could be done through novel means, like Western Union or PayPal. This is similar to what Ripple has done for bitcoin, which has enjoyed astounding success as of late due to its recent negotiation of deals with dozens of major banks across the world.
Just last month, bitcoin fell below 80% of total cryptocurrency market capitalization for the first time, largely due to massive gains by DASH and ETH. As blockchain-based technology becomes more widely accepted, “altcoins” are currently working hard to fill niches created in the digital money space. Multi-currency iOS wallet Jaxx recently added Z-Cash to the ever-growing list of coins supported by their app, signifying Apple’s increasing comfortability with the idea of cryptocurrency. More and more online casinos are also now accepting “altcoins,” the most popular being DOGE, LTC, DASH, XMR and ETH.
Law enforcement coming down on money laundering
In Florida, where a county judge recently threw out a money laundering case against a man suspected of using stolen credit card information to buy vast amounts of bitcoin, a law has been proposed that would add “virtual currencies” to the list of financial instruments used to hide illicit profits under the state’s current anti-money laundering laws. In this way, Florida’s government is now among the list of those looking to regulate bitcoin and thus legitimize it – for better or for worse. The judge who presided over the aforementioned case best described the situation that all governments are facing when she said:
“This court is unwilling to punish a man for selling his property to another, when his actions fall under a statute that is so vaguely written that even legal professionals have difficulty finding a singular meaning.”
The case was not the same in Connecticut, however, where a Russian national will face an 8-count indictment after accepting bitcoin for the sales of massive amounts of email addresses to be used for fraudulent purposes. It would seem that some states do not believe that the introduction of new legislation involving cryptocurrency is necessary, so long as the crypto-related crime can already be construed as such under existing state laws. A recently-published study found that lack of regulation is hurting bitcoin’s legitimacy in many places, furthering the idea that regulation (to some degree) is perhaps necessary to ensure bitcoin’s success and use by the general population.
In Venezuela, where the annual rate of inflation of the local currency exceeded 270% in 2016 alone (and expected to hit 1,600% by the end of this year), a lot of ordinary people are turning to bitcoin mining and investing. Although mining gear tends to be expensive, electricity in Venezuela is practically free (as a socialist country) and Venezuelans are beginning to create and transact their own bitcoin to circumvent out-of-control prices for everyday goods and services. This circumvention has drawn the eye of the government who accuse bitcoin miners and users of bypassing capital controls and being “cybercriminals,” making Venezuela’s own adoption of bitcoin regulations likely in the near future.
Some other interesting recently-developed use cases of cryptocurrency that will assuredly spark talk of regulation in their respective jurisdictions include:
- An airport parking company in Denver that now accepts bitcoin and dogecoin among 500 other forms of money as payment
- An Atlanta start-up healthcare company is implementing blockchain technology in its provision of medical record keeping services
- NASDAQ’s push for the government to classify bitcoin as “legal property”
- A recent report indicating that over 260,000 businesses in Japan alone will be using bitcoin by mid-2017