Ago Bitcoin white paper Published in 2008 and Bitcoin launched in 2009, more than 10,000 different cryptocurrencies have been created and are available for trading. It would be an understatement to say that Bitcoin, the first successful and practical application of blockchain technologyAn innovative way for people to buy and earn things and do business.
Bitcoin has become a leading digital currency, paving the way for the development of a variety of digital asset products such as NFTs and create a global market worth trillion dollars. But the road to where cryptocurrency is now is long and difficult – and the journey has only just begun.
On top of extremely volatile prices, the cryptocurrency market has had to constantly struggle with the fact that it has been and still is being used for scams and other fraudulent activities. And after nearly a decade of negativity, the US Securities and Exchange Commission (SEC) has finally decided that these criminal acts cannot be ignored. A unit focusing on cryptocurrency oversight was formed in 2017.
Since then, it has also been established that exchanges are under the regulatory umbrella of the Banking Secrecy Act (BSA), and cryptocurrencies are monitored by the Financial Crimes Enforcement Network (FinCEN), the Internal Revenue Service (IRS) and commodity futures. Trading Commission (CFTC). In 2021 alone, 35 bills geared toward regulating cryptocurrency and digital assets were introduced in the 117th Congress.
“I don’t blame the government, like the SEC, for their lateness. Because the truth is that when blockchain came out, there was a lot of hype or some kind of ambiguous sentiment,” said respected intellectual property attorney Zeming M. Gao during a discussion with Bitcoin developer Joshua. Henslee: “He humiliated almost everyone.”
“I think even senior government officials, they look at him and say, ‘Wait a minute, let’s not get involved too quickly because there might be something we didn’t understand.’ The truth is they were just being honest. They didn’t, [so] “They did not take any action,” Zhao added.
Zhao is a business and technical advisor, and chief online market strategist at Toolsots Inc. and senior advisor at professional services firm Caapable.com. He also coined the term company as a product (CaaP) and is the author of “Bitcoin & Beyond”.
The past months have been marked by the imposition of the United States government Encryption campaignsAnd each one is faster and bigger than before. In July, it was revealed that $11 billion worth of cryptocurrency exchange Kraken is under investigation by the Treasury Department after it allegedly ignored US sanctions against Iran.
On August 1, the SEC designated its contract-based smart crypto earnings program Forsage as a Ponzi scheme, charging 11 people in the process. Last month, the US Treasury also imposed sanctions on the Ethereum-based coin-mixing service for money laundering.
The penalty is a ban on all Americans who interact with the Tornado Cash platform. However, many wonder whether or not this punishment will be exhausting because it is the anonymous nature of transactions – no one can verify where or who sends them – that made Tornado Cash popular. Regardless of the effectiveness of the sanctions, these draconian measures are a clear warning for cryptocurrency platforms to make it easier for them to work or who might be the next target.
But what after these crackdowns? Although stricter legislation on cryptocurrency and blockchain is sure to follow, it would be better if policy makers and regulators made it part of their duties to learn more about these technologies.
“I hope the government will actually study from this point on, rather than just focus on it [crackdowns]. Personally, I don’t think cracking down is the primary solution. Sometimes it is necessary, [but] I don’t think it’s the basic solution. The basic solution is really [making] Certainly the right narrative is promoted, and then people have the right access to the right kind of information.”
“I think to have a solid base to make decisions like this, you have to have a thorough understanding that you have a better alternative. When you don’t have a better alternative, it is very difficult – and almost reckless – to make a decision like that,” Gao added.
The best alternative
Gao is already talking about the ability of a public blockchain To expand as a better alternative. Compared to cryptocurrencies which act as a speculative investment primarily used for trading, it is better to focus on blockchain as a technology that can not only make digital currencies more stable in terms of price and value, but also provide a variety of uses for businesses in all industries – just as the Internet has done.
Scaling is key because it allows for a continual increase in block sizes and transaction capacity, reducing fees in the process. Combined with a public blockchain that provides stability, security, and transparency, scalability provides power, efficiency, and practicality in the technology.
The opposite is what happened to Celsius Network, a crypto-lending platform. On July 13, Celsius filed for Chapter 11 bankruptcy after freezing withdrawals in an effort to keep the company afloat. Now, about 1.7 million people have lost their hard-earned savings with the C drop because they couldn’t handle the harsh market conditions.
“The problem actually is this, not that they can’t do it now, it’s that they have a solid theoretical ceiling…. It’s not a purely technological problem, it’s an architectural problem,” Zhao commented.
“You mentioned that it’s not just a technology problem [but] Architect. I also think there are economics. You need the fees to be – humans can’t understand how low the fees are needed for that to be possible…. Even today, Bitcoin SV is already outperforming any other payment system. I think the fees are still too high. So, I think that part is a big factor as well,” added Hensley.
Since platforms like Celsius cannot scale, rather than relying on revenue based on transaction volume, they are highly dependent on the price of highly volatile cryptocurrencies. Hence, when there are extreme changes in the market, like prices dropping more than 50% this year, they end up not being able to handle it and declaring bankruptcy.