WEF Highlights: Key Leaders Want Bitcoin Regulated—Probably 'Out Of Existence'
The time has come to regulate Bitcoin. And for one economist, this just might signal the death of the world’s biggest cryptocurrency.
At the recently concluded 2018 World Economic Forum (WEF), economists and world leaders sat down in a panel to discuss the need to regulate cryptocurrency. We have seen Bitcoin reach its highest value ever in the last month, reaching almost $20,000 in December 16. This peak represents the price of Bitcoin as it surges 20 times its starting price in a year. But much like its surprising surge is its quick downfall, falling to $11,000 in just a month.
Bitcoin price history
The volatility has become too much for many retailers to handle that several US household brands that declared support for Bitcoin when it started its uptake this year have started to pull out—including digital payments company Stripe and video game retailers Steam and Valve.
But no one can deny the potential of Bitcoin despite its fluctuating price and the rumors that the number of Bitcoins that can be mined is reaching its ceiling. This is why key leaders at the WEF panel sat down to discuss whether Bitcoin needs to be regulated ASAP.
Many leaders believe it’s time Bitcoin and under cryptocurrencies are subjected to the same regulations as fiat currencies—mostly because of the fact that many retailers are accepting the money as payment. Another reason, according to UK Chancellor Philip Hammond, is to extract the good side from the technology.
Hammond believes that Bitcoin has so much potential and that it is important to look at how governments can use the underlying blockchain technology behind the cryptocurrencies. “What is really important is that in regulating cryptocurrencies, we don’t inadvertently constrain the potential of the technology that underlies it—the blockchain technology—which has a wider and more important application.”
In fact, Hammond has went as far as to revealing that cryptocurrency regulation could be a major topic of discussion when the countries meet for the G20 meeting in November.
But while the strengths of Bitcoin were highlighted, its negative impacts were also brought up during the conference. Another one of the topics discussed during the panel is the level of security risk that come with the unregulated nature of this so called “currency.”
Many regulatory bodies have been concerned about Bitcoin’s association with the notorious “dark web,” where many criminals transact illegal dealings. The anonymity provided by Bitcoin makes it an easy currency for these illegal transactions, a backdoor from the tightening banking and digital payment regulations. The panel have also highlighted the vulnerability of cryptocurrency to hackers, where a recent report stated that more than 10 percent of new cryptocurrency is being stolen by hackers.
“We should be looking at these very seriously precisely because of the way they can be used, particularly by criminals,” Prime Minister Theresa May added. “It is something that has been developing. I think it is something that we do need to look at.”
Professor Joseph Stiglitz, Nobel prize-winning economist and former chief economist at the World Bank, even went as far as saying that cryptocurrencies should be robbed of its future because they have no value.
“We have a good medium of exchange called the dollar. We can trade in that [so] why do people want Bitcoin? For secrecy,” Stiglitz argued. “The banking system can and is already moving towards greater use of digital payments, but you don’t need Bitcoin for that.”
Ultimately, for him, the use of cryptocurrencies have become all about dodging the regulating eye of the government and the financial institutions. When Stripe announced its decision to abandon Bitcoin support this month, they have noted that transacting with Bitcoin has become nothing like its original promise of “fast transactions at minimal fees.” According to Stripe, transaction times for Bitcoin could take for hours, most ending in failures since the fluctuating value of Bitcoin could have already altered the end price once the computation has been made. In addition to this, transaction fees have ballooned to at most $30 in December, making the transaction so much more costly than credit card transactions.
This boils down to what users are using Bitcoin for: for secrecy. Many online casinos are now creating their own cryptocurrencies or allowing the payment of Bitcoin, as many users try to hide their gambling activities from their banks and most probably their wives or husbands. In May last year, one of the largest ransomware attack in the world called WannaCry shut down many computers and systems, asking for large sums of Bitcoin as ransom. The attackers received thousands of dollars in Bitcoin, which can never be tracked because of its anonymity.
At the end of the day, if you’re using cryptocurrency, you must be hiding something. And if you’re trying to dodge the regulatory eye, you must be doing something that you’re not supposed to be doing. Because of this, Stiglitz concluded, “by regulating the abuses [of Bitcoin, essentially,] you are going to regulate it out of existence.”