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Should All Countries Legalise Cryptocurrency Use?

 4 min read / 

Since the Bank of Russia has taken the lead with its determination to develop national cryptocurrencies through its announcement in May to legalise their use, it may be a signal that other non-fiat currencies are about to go mainstream.

At the St. Petersburg International Economic Forum in June 2017, the deputy chief of the Bank of Russia highlighted Russia’s pressing desire to develop cryptocurrencies such as Bitcoin, Ethereum and Litecoin in hope of eventually improving economic cooperation with EU countries. Recent months have also seen Japan follow suit, passing a law to make Bitcoin a legal form of online payment, and even the Bank of England has become a member of the Linux Foundation-led Hyperledger blockchain initiative, opening its doors to this new form of currency. So why are states beginning to accept cryptocurrencies as legal monetary forms- and should others follow?


Out of Hand?

Cryptocurrencies are becoming increasingly prominent in today’s society and their momentum has soared this month, with Bitcoin prices reaching a record-breaking high of $4,500, reinforcing Bitcoin’s superior strength on the market. The recent events following the UAHF (User-Activated Hard Fork) have bifurcated the blockchain into two, leading to the creation of Bitcoin Cash- which aims to increase the rapidity of transactions- and SegWit2x, which will alter the storage of some data. This is thus attracting a large amount of attention of millennials.

The transparency associated with cryptocurrencies is revolutionary, with all transactions being listed on the blockchain. Llew Classen, the Executive Director of the Bitcoin Foundation, underlined the fact that cryptocurrencies offered individuals more power over their assets. The lack of an external source of control inevitably means that governments seek to influence these currencies.

Cryptic-currencies

One serious disadvantage to the transparency of Bitcoin is developers’ issues raised with its design, which is moulded around distributed ledger technology, meaning that all users possess identical payment records, stored in the blockchain. This, coupled with potential manipulation and fraudulent transactions – such as those associated with the Silk Road marketplace – is a cause for concern noted by the US Securities and Exchange Commission. The SEC highlighted the necessity for regulatory administration in the Bitcoin exchange market.

Legalisation – Bitcoin by Bitcoin

More states are beginning to recognise the immense benefits associated with cryptocurrencies, with countries such as Australia and Japan implementing policies to legally recognise Bitcoin exchanges. The regulations of exchanges ensure that cryptocurrency transactions comply with current anti-money laundering laws and prevent terrorism financing, with Japan consequently imposing injunctions such as compulsory registration with the government and obligatory auditing by a verified accountant annually.

Following the legalisation of the Bitcoin payment in Japan in early May, the clear elevation in prices of Bitcoin demonstrates that institutional investors have been encouraged to purchase the currencies. This embracing approach has also been displayed by Nevada, which passed Bill 398 to safeguard the blockchain by preventing local governments from taxing or imposing conditions that would prevent its use.

Conclusion

Although disparaged by several governments and institutions such as the Bank of Mexico, cryptocurrencies hold great importance in the future of finance. The use of Fintech to create smart contracts offers hope regarding regulations, but this predominantly relies on states accepting the legality of currencies such as Bitcoin. Governments should seriously consider legalising cryptocurrencies as methods of payment in order to encourage their wider use for instantaneous transactions, heightened security and recognition at a universal level. In these changing times, we live in a fast-paced, multi-dimensional society and it is vital that governments compete in a progressively globalised and cyber age through the use of cryptocurrencies.

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Cryptocurrencies

Crypto Carnage: Blood on the Dance Floor

 3 min read / 

crypto crash

It is said that ‘Blue Monday’, typically the third Monday of January, is the most depressing day of the year. This has, undoubtedly, been the case for cryptocurrency owners worldwide; from Monday onwards, almost all of the world’s major cryptocurrencies have seen a drastic slump in their prices.

Having reached the $14,000 mark last week, Monday onwards marked a severe fall in Bitcoin’s value. On Wednesday, the dubbed ‘king of cryptocurrencies’ dropped to below $10,000 for the first time since the end of November, before making a small recovery on Thursday. It stands at $11,500 at the time of writing, but the day is still young.

And Bitcoin has only been leading the way. At this point last week, the price of Ethereum, the second most valuable cryptocurrency, was approximately $1,200; a slump on Monday saw it fall to a low of $800 on Wednesday before pushing through the $1,000 threshold again, and reaching $1,030 a day later.

Ripple’s XRP also followed suit; the cryptocurrency has almost halved in value over the past week – from around the $2 mark to a low of $1.20 on Tuesday. Since then, it has marginally recovered in price, to $1.48 at the time of writing.

Monero, IOTA and Cardano were also impacted – since Monday, they have declined in price by 35%, 22% and 21%, respectively. Litecoin now sits at $195, down from $240 at the beginning of the week.

The crash occurred at a time of optimism and hope for cryptocurrency owners. Just earlier this week, US money transfer company MoneyGram announced a partnership with Ripple in the aim of streamlining money transfers. Yesterday also marked the expiration of the first Bitcoin futures contract that had been listed by the CBOE.

Still, China’s offensive rhetoric against Bitcoin and other cryptocurrencies in the last seven days is likely to have stoked fears amongst investors, causing a major sell-off. The country confirmed earlier this week that it was seeking to further clamp down on its restrictions against virtual currencies by eliminating cryptocurrency trading.

It has also recently announced plans to further restrict Bitcoin mining within the country. Recent statements coming from Chinese governmental circles could go as far as to suggest that China wants to eliminate cryptocurrencies outright: the People’s Bank of China (PBoC) vice governor, Pan Gongsheng, purportedly encouraged the state to introduce a total ban on cryptocurrencies.

China is by no means the only country to have espoused hostility toward cryptocurrencies. Russia also partially echoed China’s scepticism – President Vladimir Putin noted this week that “in broad terms, legislative regulation will be definitely required in future”.

South Korea’s unreceptive stance toward digital coins – it was reported earlier this week that its finance minister, Kim Dong-yeon, had stated that the government would be introducing measures to clamp down on the “irrational” cryptocurrency investment rage – may have also played a part in driving prices down.

Still, for every bear, there seems to be a bull. Time shall tell whether increasing restrictions on cryptocurrencies from different governments will further impinge on their price, or if they will find a way to adapt to the new obstacles and prove all those championing them (and making millions in the process) right.

Keep reading |  3 min read

Cryptocurrencies

UK Banks Shun Bitcoin

UK banks Bitcoin

No UK banks have partnered with cryptocurrency exchanges.

Editor’s Remarks: The lack of any relationships between UK banks and cryptocurrency exchanges means that UK investors currently have to move their money through a series of foreign exchange transactions and services before they can cash out their profits. As a result, they incur high fees and often the suspicion of their banks. This is contrary to many European banks, which have partnered with such exchanges. To an extent, this is because the UK retail banking sector is highly concentrated, whereas in Europe and the US the consumer has more options. The UK government is also due to release guidance on how cryptocurrency gains are to be taxed in the next few days.

Read more on Bitcoin:

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Asia

Hacks on Cryptocurrency Exchanges Linked to North Korea

 1 min read / 

hacks

A report has linked a hacker group, responsible for targeting crypto-investors and exchanges, to the North Korean state.

The attacks took place against South-Korean crypto-exchanges and included attempts to harvest users’ passwords. The report does not say if the attacks were successful.

The report, by internet technology company, Recorded Future, has identified the attackers as the group Lazarus, known to be associated with the hermit kingdom. The malware was similar to that used against Sony Pictures in 2015, the WannaCry ransomware attack in 2017 as well as the Bangladeshi bank heist in 2016.

Attacks began when cryptocurrencies started to rapidly increase in value. It is believed North Korea favours attacks on cryptocurrency because they are not linked to any bank or government, making attempted heists less politically incendiary.

North Korea has shown a great interest in crypto-currency, potentially as a means for funding itself. In 2017, the elite Pyongyang university started to run courses on the virtual tender.

Keep reading |  1 min read

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