Bitcoin is currently the most popular cryptocurrency and with a market cap of about $215Billion, it continues to draw in massive amounts of investors. Since its creation in 2009, Bitcoin’s network has continually grown and made its way into all corners of the world.
The end of 2017 saw the value of a single BTC reach $19,700. But now, despite Bitcoin’s huge value and potential, a professor at Harvard University is predicting the collapse of the market. And that this will mostly be due to government regulations.
A Controversial Subject
This isn’t the only time that someone has predicted the fall of Bitcoin. Jeffrey Sachs, a professor at Columbia University, thinks the Bitcoin market is nothing but a bubble and, sooner or later, it’s going to burst. According to him, the success of the cryptocurrency is fueled by the speculation of the investors who believe in the value of Bitcoin.
Bitcoin has not yet actually seen much stability. At end of 2017, after it broke its records and peaked at $19,700, the cryptocurrency saw a huge drop and bottomed out at $13,000. This type of volatility is only one of the reasons why big institutions are skeptical about digital currency.
The End of Bitcoin
According to Harvard professor Kenneth S. Rogoff, the anonymity of cryptocurrencies will undeniably lead to regulations that will have massive impacts on the price of Bitcoin. He shared his point of view in a recent blog post saying, “… in the long run, the technology will prosper, however, the price of Bitcoin will crash.”
It turns out that what is often perceived as one of the benefits of cryptocurrencies, is a flaw. According to Rogoff, small anonymous transactions of cryptocurrency aren’t the problem. It’s the transactions of large sums that make it difficult to collect taxes and fight criminal activity. Sooner or later, the professor believes that governments will regulate the use of cryptocurrencies, which will affect the way it can be used in certain countries.
Throughout history, new ideas and innovation always start up in the private sector, but eventually, governments regulate and appropriate them… Nothing suggest that Bitcoin will be any different.
Governments Want to Grab the Bull by the Horns
Many countries are now starting to see the regulation of Bitcoin as a priority. Keep in mind that cryptocurrencies are based on Blockchain technology, which keeps them completely free and independent from the traditional world of finance.
According to many state officials, this sort of financial freedom is high risk and could promote tax evasion and money laundering. Because of this risk, many governments have announced measures to regulate the trade of Bitcoin and other forms of digital currency.
The Chinese government has recently imposed a ban on the exchange of virtual currencies in the country and other measures such as shutting down Chinese cryptocurrency miners have also been considered. Given that more than 80% of miners are in China, this could have significant consequences on the markets.
Russian President, Vladimir Putin had also planned to ban the exchange of virtual currencies in Russia. However, instead of banning the currencies, legislation will be put in place. The country is also planning to launch their own cryptocurrency.
Today, despite countless predictions, the Bitcoin market is still in good standings. However, its future is still uncertain and depends largely on how government plan to regulate the industry.