Anti-crypto currency measures could be inefficient in the long run but they influence the marketplace
The fact that an important country could decide to make crypto currencies illegal or to impose restrictive measures was considered a few month ago to be the worst case scenario by various experts and critics of crypto-currency. It will be indeed interesting to actually take a look at the possible consequences of such a decision, but also to what extent this could or not become a reality.
The popularity of cryptocurrencies is the first milestone of a new economic and financial era, in which these assets play a big role in our daily lives. It gives you much more freedom than currency such as dollars or Euro, as you can make worldwide transactions while paying little to no fee. Not only it’s nearly free, it’s also faster. Because of this technology, some companies like PayPal may become obsolete in the future, and banking institutions would may lose some of their popularity.
It’s no surprise that many actors in the banking industry are starting to worry about this type of cryptocurrency.
As for governments, their issue when it comes to virtual currencies revolve around the illegal use some people make of it. Indeed, over the past years, crypto-currencies such as Bitcoin has been used in black markets and money laundering processes, and tax fraud.
Can we stop the growth of cryptocurrencies?
Either those who think of cryptocurrencies as trend or those who think it’s possible to stop people from using it, might be wrong. It wouldn’t be this popular among people if it didn’t hold any practical value; for sure, the craze will calm down one day, it doesn’t mean that actual cryptocurrencies prices will necessarily drop back to their initial low. Even if bitcoin lose his value, others will take their place as soon as possible, because they’re a pertinent answer to several issues people are actually facing with money.
Forbidding its use would do more harm than good, because not everyone is making an illegal use of cryptocurrencies. Most people are buying it at the moment to make profit with trading. Such war would also be ineffective, as it is kind of hard to track down its users and how they use it, because cryptocurrencies are designed to offer as much privacy as possible to their owners. Crypto-currency inputs are faster, with lower costs and most importantly they bring the aspect of innovation.
However these prohibitions are not here without their consequences, as crypto currencies have a much known characteristic to them: extreme volatility, just like all the currencies and monetary systems that are seeing the daylight or are disappearing.
Thus, it is sufficient that the Chinese government announces a new restrictive measure and as a consequence the market will panic and there will be a drop into the price.
And only if, several governments announce in a coordinated way, at the same time, presenting similar measures, we will be put face to face with crypto currencies crashes.
What can be done, then?
Cryptocurrency aren’t necessarily a threat to banking institutions and government’s authority, it could even be complementary to those.
For example, the Ripple network is a blockchain-like network on which you can trade the XRP cryptocurrency, and which allows either banking institutions or normal people to make lightning fast transactions through its various nodes. In this case, banks are not kept out of the system, and the appearance of these kind of network in the future might change the face of banking institutions, without whipping them out of the earth.
A disparate international policy
2017 was the year where crypto currencies have seen an explosion and have raised the attention of banking institutions and states.
2018 could very well be the year where regulations will be set up.
Thus, investors will have to follow the news and comply to surprise measures in order to anticipate the market place .