Encrypted currency is a brand new asset class. The oldest cryptocurrency, Bitcoin, has not been developed for more than 10 years, so that there are no sound laws and regulations on cryptocurrencies in the world. Therefore, cryptocurrencies have been suspected of being out of the mainstream and are often affixed. Negative labels such as “crime, money laundering, market manipulation and grey areas”.
In 2019, cryptocurrency was still basically an unregulated market. There are few rules that regulate behavior or the law that punishes misconduct. In addition to a few major moves, such as the Securities and Exchange Commission (SEC) regulations in the United States and Malta's “blockchain island” policy, it is still a game that everyone can participate in – the “gold rush” on the blockchain. ".
The regulation of the blockchain will be inevitable – a fact that may make many people feel uncomfortable, but it doesn't have to be. This article puts forward the idea of “only actively embrace supervision, cryptocurrency has a better future” and elaborates on the benefits of regulation for cryptocurrency.
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01 Prevent fraud
The most secret of cryptocurrencies is that many activities are classified as crimes if you use real money; but with cryptocurrencies, these activities are completely legal. Bitconnect has become a typical example of this problem . It seems to be running a Ponzi scheme , but the project founder can escape the crime.
And laws and regulations help reduce the above scams, making it easier and safer to invest and trade cryptocurrencies. There are two reasons for this: 1. Supervision will expose the scam to the risk of litigation; 2. The scam will also face a system that makes the plan more difficult to implement.
02 Limit market manipulation
Market manipulation in cryptocurrency transactions is very rampant. If you know enough of the rich, you can also plan a market manipulation. All you have to do is make a “pull-scratch” plan where your team buys a token and the buy can increase its value and then after the price reaches your target price. Sell it out.
This process also means that the value of a token is usually not related to its underlying technology or potential – it only wants to make money, which may make the original intention of changing the world's technology forgotten.
And regulation can prevent this from happening. It not only allows the purchase of tokens to be determined by the belief in technology, but also guarantees the security of the entire encryption economy.
03 more advanced legitimacy
Regulation not only brings protection, it is also about legitimacy. Although cryptocurrency can trade with fiat money , it seems to be outside the traditional financial system. This severely inhibits the overall potential of cryptocurrencies. Even if there are sporadic restaurants or websites that are willing to accept bitcoin payments, most merchants refuse, not only because of its huge volatility, but mainly because the cryptocurrency is still in a gray area.
Once the cryptocurrency has more stringent regulations, it is possible to fully enter the mainstream world. Enterprises will not hesitate because they have stronger protection measures at this time.
04 Prevention of financial crimes
Crimes are one of the biggest criticisms of cryptocurrencies and the main reason for preventing them from entering the mainstream world. Bitcoin was once considered a safe way for criminals to trade.
Since most of the cryptocurrencies are anonymous, the only identifier is the wallet address , and criminals can still continue their secret illegal activities.
Legitimacy and regulation can effectively prevent these criminal activities. Money laundering becomes more difficult when authorities have better ways to detect suspicious wallets. It may also be a way to prevent theft of assets.
05 clarify cryptocurrency classification
Word expression is very important. Although it may seem like a trivial matter, using the right words allows people to communicate ideas more clearly. Accurate communication is almost impossible without paying attention to language.
The field of Bitcoin and other altcoins is very new , so there is no suitable dictionary or classification to explain them. This also makes it difficult to manage the transfer of tokens between countries, because regulatory differences between different entities can make it difficult to determine which laws apply to cryptocurrencies and where they apply.
06 More investor interest
But regulation will bring security, no one wants to ride a roller coaster that looks like a poorly maintained, but if the public believes that the company behind it is very concerned about their interests, many people are willing to jump on this exciting roller coaster.
07 stable encryption ecological environment
Some people may think that the overall volatility of cryptocurrencies is the most exciting aspect of the field. Although no one sees it as a panacea for solving the problem of money, it actually puts people under stress and the price of the token is easy to manipulate, making it difficult to think of it as a serious investment or trading option.
Fortunately, regulation is of great benefit to stabilizing the cryptocurrency ecosystem. The volatility of the encryption market is largely due to the fact that traders can trade at will with little or no accountability. With the introduction of regulatory measures, improper transactions will be reduced, and those that are currently prevalent will be difficult to sustain. This in turn reduces the volatility of the cryptocurrency, creating a safer environment for traders around the world.
Encrypted currencies need to be regulated. If there is no regulation, the encryption market will become a game that easily manipulates people's emotions and prices, leaving behind the systems, technologies and potentials represented by each token.
If you want Bitcoin or other cryptocurrencies to have a better future, then you should support Bitcoin legislation – and pass as soon as possible.
Message Mining No. 302: Do you expect supervision and legislation on cryptocurrency? why? Feel free to share your opinion in the message area.
Compile: Deep Alchemy
Source: vernacular blockchain
『Declaration : This article was translated from DRIVE Insider by Sara Whister. The translator has deleted it. The article is an independent view of the original author, does not represent the vernacular blockchain position, and does not constitute any investment advice or suggestion. It is not authorized by any third party to reproduce this article without the authorization of the “white-speaking blockchain”. 』