Bitcoin Prices Fall As Korea Cracks Down on Crypto
The price of Bitcoin has been fluctuating wildly for the last few weeks. This erratic behavior is not random, and governmental authorities seem to think that there should be trading regulation. Unfortunately, the main advantages seen by crypto-investors with Bitcoin and other cryptocurrencies is that they’re unregulated and have a decentralized design. This is also the primary main reason why the world is heavily invested into it. However, that’s just one side of the “coin”.
How & Why Is Crypto Being Restricted?
The same decentralized, almost anonymous nature cryptocurrencies possess can have disastrous consequences to a nation’s security. Money is “hardware” and hence can be seen, and also tracked if needed. Cryptocurrencies, on the other hand, are “software”, existing simply as a form of 0’s and 1’s on some bloke’s hard drive. It only makes sense why nations are trying to keep it on a short leash. Governments around the world have proposed rules and regulations to monitor the flow of cryptocurrencies, but their exact methodology is yet to be fully developed.
South Korea is among the first countries to have placed restrictions on Bitcoin. Specifically, the government is cracking down on anonymous trading. Around 20 to 30 percent of all Bitcoin transactions happen through South Korea. This is also true for other major cryptocurrencies like Litecoin and Ripple to name a few. Regulators are concerned that the ungoverned nature of Bitcoin can cover the tracks of criminals with malicious intents. South Korea has among the lowest crime rates in the region, if not the world, and it is clear that they want to maintain this reputation.
When something isn’t understood, it’s better to consult the experts. At the World Economic Forum held in Davos, the topic of cryptocurrency was nothing less than controversial. Experts had positive comments. Neil Rimer, who is co-founder and general partner of Index Ventures SA, a global venture capitalist firm, said: “I think this is one of the most audacious, generous and profound inventions that I’ve witnessed in my career,”.
He further added: “We’re nine years into this experiment. It’s gone well at times and quite poorly. It could fail completely and go to zero, but it has accomplished a number of things I think are remarkable”. One thing that he and other experts had in common was the belief that cryptocurrencies are too volatile to be effectively used as money and the unregulated nature of it could promote illegal activities. The experts suggested regulations could be the key to make cryptocurrencies acceptable in today’s world.
What Would Be the Impact?
The unregulated nature of Bitcoin and other cryptocurrencies is the main reason behind its dominance. Not having to pay taxes or levies on a currency that can be easily generated seems “Utopian”. The lack of central management meant individuals were free to purchase to their hearts content. Placing regulations is tricky and placing them on a suspect is even trickier.
In an ideal situation, the purchaser is sound. They know the law and what they can and can’t purchase. They utilize the cryptocurrency in the best way they can.
However, this is far from reality. The same anonymity also applies to people with malicious intents. Couple that with the fact that there isn’t a proper system for taxing cryptocurrencies as of yet, it does create an incentive that is hard to refuse.
Will the Crypto-Market Continue to Drop?
Regulation might have a negligible impact on the price in the long run. The actual price of any commodity is determined by the people willing to buy it. With regulation, who knows, it may attract future investors and buyers. Overall, regulating it may open up new doors in the future and may even cause prices to drop presently. The opposite might also happen, considering the unpredictable nature of cryptocurrencies.