September 8, 2017
Bitcoin (BTC) is a cryptocurrency that has gone from being thought of as a futuristic digital banking solution to an increasingly popular currency with huge potential, and that has recently reached an all-time high. More industries are adopting it or making it an available service for clients each year.
Take Malta for example. The island nation is planning to aggressively move forward and become the top users of Blockchain and Bitcoin (among other digital currencies). Even the country’s gambling regulatory authority — the Malta Gaming Authority (MGA) — a long pioneer in online gambling, is speeding ahead with its plans to legally permit the use of bitcoins within its online casinos.
Still, the future of this alternative currency has garnered a considerable amount of debate in financial circles. While some are thrilled with the success of Bitcoin, others are leery of the currency becoming widespread because it isn’t strictly regulated like other financial institutions.
Bitcoin may become the new gold
This may be the best year for Bitcoin yet. According to Wall Street, the digital currency has already more than tripled in value this year, recently leaping to record highs of more than $3,500.
Fundstrat’s Tom Lee, a top Wall Street strategist, told CNBC that he anticipates Bitcoin to be the best performing asset class through the end of 2017. Furthermore, he expects that the rising institutional investor demand from the launch of BTC derivatives will help drive the cryptocurrency price even higher.
Commenting on Bitcoin, Lee said: “It has a lot of characteristics that are very similar to gold that I think will make it ultimately attractive as an alternate currency,” he said. “It’s a good store of value.”
Bitcoin at a glance – understanding its popularity
According to the infographic, Digital Currency – The Rise and Rise of Bitcoin, Bitcoin was invented some time in 2007 by an unidentified programmer or group of programmers under the name Satoshi Nakamoto. It is an open accounting system that enables thousands of computers across the globe to track the ownership of digital tokens, using Bitcoin as a purchase transaction. Bitcoin.org was first registered in August 2008 and the very first Bitcoin transaction took place in January 2009.
Bitcoin is a method of payment and a currency. The major difference between Bitcoin and traditional currencies (e.g. Dollar, Euro, Pound, etc.) is it is purely digital. This currency is not available in coin or paper money formats. It also doesn’t have a central bank like the Federal Reserve. It exists and functions solely in the peer-to-peer marketplace.
BTC can be transferred only between users via their Bitcoin addresses, which consist of a series of numbers and letters that range from 27 to 34 characters. Addresses do not hold Bitcoins. The addresses are stored as transactions in Blockchain, a public ledger where you can view transactions and aggregate them. In other words, there is no physical object, organization or digital file that holds your bitcoins.
Every day, BTC is traded in thousands of dollars without a credit card company or any other middleman being involved. It is secure and offers users a great deal of anonymity.
Bitcoin and future regulations
Currently, Bitcoin addresses and protocol don’t require customer identification. Each address is generated by a wallet that isn’t associated with an actual person. Companies that partake in the exchanging of digital currency are not as strictly regulated as other financial institutions where documented identities are required. Plus, with bitcoins, transactions can be carried out anonymously via proxies or TOR networks that route Internet traffic over various stations, which hides the originating IP addresses.
Due to the lack of regulation and anonymity, it’s easy to see how Bitcoin could be used as a convenient tool for money launderers and tax evasion. Bitcoin doesn’t go through a traditional banking system, making it easier for criminals to move dirty money through the system. This, on top of the fact that Bitcoin transactions are typically spread over multiple geographic boundaries, make it difficult to know which laws apply to a transaction or, in the case of criminal activity, it causes confusion over which jurisdiction a criminal investigation applies.
Can Bitcoin be regulated? According to an article by the Nation, it can and it can’t. It can’t be regulated because it enables people to exchange value without the intervention of the government. Users can seamlessly make transactions across diverse geographical boundaries and bypass exchange rates and monetary cuts from middlemen.
Currently, governments are investigating ways to regulate it but there is no clear way on how to go about doing it. For now, the power governments have over Bitcoin is to simply not recognize it, block access to Blockchain, issue restrictive licenses that drive out major Bitcoin businesses, or pass laws that make BTC illegal.
Of course, there are major downsides to outlawing Bitcoin. This cryptocurrency is becoming more widely accepted. By preventing local business markets from using it, this can come at a cost in the form of stalling economic progress. This can lead to a lack of technical innovation in countries that do not embrace the currency and give greater advantages to other nations that do.
Valentine Fornelli is an author for VegasMaster, an online magazine covering all the latest, most interesting and relevant information pertaining to the gambling industry. She is also a writing enthusiast and a lover of travel and tech.