- Bitcoin is growing in popularity around the world.
- As regulators examine Bitcoin, stronger regulations could easily become strict bans on cryptocurrency.
Bitcoin has been working to expand its reach across the globe since it was originally launched, which it seems to be doing quite well. However, by placing itself in this position, it has now reached a point when it is a political subject in nearly every part of the world. From tweets by the President about it to discussions in Congress, Bitcoin is in the public’s sights.
As the Federal Reserve urges caution against the industry, and the Treasury Secretary expresses the belief that cryptocurrencies could ultimately be a threat to national security, investors don’t seem deterred. Some countries are trying to stop the use of cryptocurrency with a ban on Bitcoin (like India), while others try to create their own cryptocurrencies (like China).
According to a theory by Eric Voskuil, there’s four phases that Bitcoin will ultimately go through with the regulators and states, which are:
- Black Market
Right now, it is clear that the United States is still in the honeymoon stage, which means that the governments aren’t fully outlawing Bitcoin yet. However, they are putting regulatory pressure on any companies that are presently involved in the crypto environment. As Voskuil states, this phase “is characterized by a desire of state agencies to retail regulatory control.” A perfect example of this process taking place is with the BitLicense in New York.
New, Bitcoin should enter the Black Market phase, during which time the governments will outlaw Bitcoin transactions and the mining of Bitcoin. In many countries of the world, this stage is already taking place, due to worries that the monopoly on fiat currency is being threatened in that stage. One of the latest countries to enter this stage is India, as the regulators have already proposed a complete ban that would criminalize the digital possession, mining, and transacting of Bitcoin.
Voskuil explained that, during this phase, it is possible that other states will end up issuing their own digital currency, which “may coincide with the adoption of official new money, i.e. Fedcoin.” An article by CCN points out how close this is to a proposal in India for a “digital rupee” to be the only available form of legal tender. China, Russia, Iran, and Venezuela have all come out with their own cryptocurrencies that they are trying out as well.
The stages, according to Voskuil, can overlap, and each region of the world is at a different place. However, if the states end up working together to eradicate cryptocurrency, the situation could get worse, creating a worldwide “war on Bitcoin.” While this would be a worst-case scenario, Bitcoin users should still take note.
As far as the reality of whether this “war” could happen, Nic Carter, co-founder of CoinMetrics.io and partner of Castle Island Ventures, explained that it is likely that the United States will implement stricter regulations, rather than a full ban.
I'm not saying it's guaranteed to happen in the US, but I think regulators could definitely tighten the noose (rather than full illegalization). Overseas ownership and exchange have already been criminalize in some jurisdictions.
— nic carter (@nic__carter) July 15, 2019
The next few years will be a very big deal for Bitcoin’s future. Governments will soon realize that Bitcoin isn’t going anywhere, which leaves them with a decision – to fight back or regulate.
To read the full theory by Voskuil, visit Github.
Presently, a single Bitcoin is worth $9,494.12, dropping by over 6% in the last 24 hours.