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Bitcoin

Crypto fever

If you took a quick walk around Dublin today you’d think that Bitcoin fever has gripped the masses; it seems that every passing bus is plastered with the same eToro crypto ad. Bitcoin’s massive increase in value over the last five years has drawn people into cryptocurrency trading at a truly astronomical rate. Five years ago, cryptocurrency was perceived as a shadowy, clandestine thing, sustaining the online ‘silk road’ black market. Nowadays, crypto is — for most people — a more exciting version of the stock market. With all of these positive changes, how has Bitcoin been steadily declining in value since the crypto craze in January?

Bitcoin republic

Removing the middleman doesn’t come without its trade-offs. As more people get interested and the value of the currency rises, more and more transactions must be authenticated each day. In the case of Bitcoin, the resulting blockchain-based arms race is responsible for astronomical power usage. The fact that an intangible currency which is terribly inefficient — and has no tangible use — burns more electricity than all of Ireland is completely absurd. If we’re going to get serious about climate change, we need to confront the reality that it’s probably better to jettison a currency which is theoretically revolutionary but functionally useless (see last December).

Changing attitudes

As countries scrambled to regulate the cryptocurrency market, it quickly became more difficult for people to dip their toes in the water. I remember having a cursory interest in crypto last January,¬†which is when the market surged in value. Every website was plagued with regulatory checks; I had to upload a picture of my passport just to buy a pittance of Bitcoin. Cryptocurrency’s problem is that it’s decentralized by nature. There is no centralized body or bank to hold to account when data protection malpractice occurs.

Most people — myself included — wouldn’t think twice about sharing their passport with a bank. We trust that banks adhere to strict data protection regulations because they have a reputation (as well as our money) to protect. For you and me, regulation in the crypto industry means entrusting the same highly sensitive data to less stringent third parties. In the context of recent data protection scandals, is it really that inconceivable that increasingly stringent regulations could be driving interest away from the crypto market?

Healthy scepticism

Governmental regulations aren’t the only factors at play either. Following the demise of some very dubious crypto-related services, Google and Facebook effectively banned all cryptocurrency advertisements. The ramifications of this are huge: it’s impossible for startups to advertise initial coin offerings (ICOs) in a cost-effective manner. This is probably why you only see cryptocurrency ads when they’re in print or billboard form, and sponsored by exchanges with lots of money behind them. This undoubtedly lends the cryptocurrency market an air of credibility and protects consumers. However, it also stifles competition between cryptocurrencies as large coins which are already listed on these exchanges have an unfair advantage.

It’s not all bad

Regulation will never be the final nail in the coffin for cryptocurrencies, but it might be for Bitcoin. While Bitcoin was revolutionary as a working proof-of-concept, there are far more exciting cryptocurrency projects which will utilize blockchain technologies to provide useful solutions. Rising cryptocurrencies will let you charge your electric car, or let you rent a truly global supercomputer. The incredible possibilities of these emerging projects will speak for themselves; with or without advertising regulation — although I’m not sure the same can be said of Bitcoin. Bitcoin will always be remembered as the genesis of cryptocurrency — however, nine years after its creation, perhaps it’s time we moved on to bigger and better things.

Post Author: Eoin Blunnie

I'm a cool guy, but I'll definitely die if you feed me horse hair. Beware the horses.