The future of Bitcoin is determined by how many people will adopt bitcoin as a payment method. Blockchain, however, seems to be more readily accepted than Bitcoin. What are some of the elements promoting the acceptance of Bitcoin and what are some preventing it?
In a sense, the financial crisis of 2008 led to the creation of Bitcoin, as Satoshi Nakamoto was partly driven by anger on the recent financial crisis. In a 500 word essay he wrote:
“The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.”(2)
New directive against money laundering.
Secondly, European guidelines could help the adoption of Bitcoin. Tax evasion, money laundering, and crime are an issue for Bitcoin from an EU perspective. The report mentions:
However, the new guidelines could also hurt the adoption of Bitcoin. AMLD 5 deals with the aspect of anonymity. It is depending on how many people find it a problem that wallet providers have a responsibility to report suspicious transactions to financial intelligence units.
The new guidelines of the European Union also have implications for the various ATM Networks around the European Union, as they are forced to identify their customers.
At the moment a number of European countries have been waiting for a standard, approach to cryptocurrency taxation. The government in Belgium, which is home to many EU institutions, has not issued an official stance on the matter. Each jurisdiction is expected to take its own decisions in the short run. (5) At the moment there are different tax laws in different countries.
Taxation can, therefore, be complicated and in some cases needs to be simplified.
In the past exchanges have become targets for digital attacks, and together with wallet providers. developed safer methods. Storing cryptocurrency in cold storage is one-way exchanges, and custodian wallet providers are updating their security measures.
Three recent big attacks, however, took place in Japan and in South Korean fairly recent..
- Zaif in Japan lost 59 Million dollars of customer assets. (6)
- Youbit from South-Korea shut down in December 2017 after a second attack. (7)
- And Coinrail, also from South-Korea was attacked in June last year. Coinrail however, was able to bounce back from a 40 million dollar loss. (8)
The series of attacks on exchanges do create doubt and distrust for the new Bitcoin user. Leading new Bitcoin users to figure out which wallets and exchanges are trustworthy, which can seem a daunting task. Thankfully there are many good companies and useful information to be found. Bitcoin.org is the original website for Bitcoin and has an extensive information database.
Online attacks are one reason that Denarium prefers a cold storage option, Physical Bitcoins. Also, Coinmotion, part of Prasos, founded in 2012 keeps customers’ funds in cold storage. Because of attacks, security has become a focus in the cryptocurrency scene and this leads to more secure methods.
There is a wide scale of other cryptocurrencies that are competing with Bitcoin, including those that forked (10) away from the original rules and technology of Bitcoin, such as Dash, BCHABC and BCHSV and Bitcoin gold.
These cryptocurrencies are newer than Bitcoin and are versions that came out of Bitcoin. However, they are not necessarily better. People are generally divided in this aspect. Bitcoin still has the largest market cap (11) and has seen growth over the last year.
Governments and National Banks:
One of the reasons Bitcoin has taken off, was because it is decentralized without requiring trust in governing authority. Governments now have a choice to promote, forbid, or allow Bitcoin to flourish. Banks have an opportunity to either jump on board to manage people’s cryptocurrency assets or potentially lose out on potential profit. Here is an article on banks that accept Bitcoin. (12)
Bitcoin has shaped the financial sector and especially the Finntech industry in the last decade. The mass adoption of Bitcoin in the future will determine it’s value. It is worthwhile to investigate the developments in the government, financial and cryptocurrency sector to stay up to date on Bitcoin as a long term investment.
1″Initiative map | EUBlockchain – EU Blockchain Observatory and Forum.” https://www.eublockchainforum.eu/initiative-map. Accessed 23 Jan. 2019.
2″The Crypto-Currency | The New Yorker.” 10 Oct. 2011, https://www.newyorker.com/magazine/2011/10/10/the-crypto-currency. Accessed 21 Jan. 2019.
3″Venezuela’s Hyperinflation Hits 80,000% Per Year in 2018 – Forbes.” 1 Jan. 2019, https://www.forbes.com/sites/stevehanke/2019/01/01/venezuelas-hyperinflation-hits-80000-per-year-in-2018/. Accessed 23 Jan. 2019.
4″Cryptocurrencies and blockchain – European Parliament – Europa EU.” http://www.europarl.europa.eu/cmsdata/150761/TAX3%20Study%20on%20cryptocurrencies%20and%20blockchain.pdf. Accessed 21 Jan. 2019.
5″0 to 50% – Time to Pay Crypto Taxes in the European … – Bitcoin News.” 22 Mar. 2018, https://news.bitcoin.com/0-to-50-time-to-pay-crypto-taxes-in-the-european-union/. Accessed 21 Jan. 2019.
6″Japanese Cryptocurrency Exchange Hacked, $59 Million in Losses ….” 19 Sep. 2018, https://cointelegraph.com/news/japanese-cryptocurrency-exchange-hacked-59-million-in-losses-reported. Accessed 23 Jan. 2019.
7″Bitcoin exchange Youbit shuts after second hack attack – BBC News.” 19 Dec. 2017, https://www.bbc.com/news/technology-42409815. Accessed 23 Jan. 2019.
8″Coinrail Bounces Back After Shutdown, Will Reimburse Stolen ….” 16 Jul. 2018, https://unhashed.com/cryptocurrency-news/coinrail-bounces-back-after-shutdown-reimburse-stolen-crypto/. Accessed 23 Jan. 2019
9″Are there any exchanges that have never been hacked ….” 10 Jun. 2018, https://www.reddit.com/r/CryptoCurrency/comments/8q0wrv/are_there_any_exchanges_that_have_never_been/. Accessed 23 Jan. 2019.
10″What you need to know about the Bitcoin Cash ‘hard fork’ – MarketWatch.” 15 Nov. 2018, https://www.marketwatch.com/story/what-you-need-to-know-about-the-bitcoin-cash-hard-fork-2018-11-13. Accessed 21 Dec. 2018.
11 “Global Charts | CoinMarketCap.” https://coinmarketcap.com/charts/. Accessed 23 Jan. 2019.
12 “Which Banks Accept Bitcoin? Get The List | Banks.com.” 15 Feb. 2018, https://www.banks.com/articles/cryptocurrency/banks-that-accept-bitcoin/. Accessed 23 Jan. 2019.