From the success of Bitcoin, the cryptocurrency market has been flooded with fake cryptocurrencies and scammers looking to take advantage of the eagerness of would be investors. This is highly likely one of the reasons why there are so many misconceptions about cryptocurrencies and why some traders have a hard time investing. With regulations being planned and a new taskforce being established in the UK to analyse the risks and rewards involved, this is a welcome step for both traders and the companies that should see trust in the asset class grow.
Cryptocurrencies have significantly developed and matured in in the past few years. Completely digital and constructed using blockchain technology, they are a new means of raising capital for funding new or existing business ventures. However, they inevitably attract scammers looking to take advantage of the eagerness of would be investors.
This is a real challenge for the crypto world, as it is creating distrust amongst potential participants. Regulation is needed to prevent such scammers finding any kind of success. However, to thoroughly protect the consumer it is important that governing bodies do not create too many barriers, or stifle growth of a new, accessible and highly efficient means of funding a genuine business concept. The regulators have to serve the common good and ensure that any upcoming regulation, or government policies, are strong and reflective of the community.
Cryptocurrency exchanges are not all good guys. Some are rogue businesses that don’t adhere to the law and put investor’s capital at risk. This can also encourage criminals to use cryptocurrencies to fund criminal activities. Introducing regulation to the system will help avoid these problems because exchange firms will be under a strict legal system.
Cryptocurrencies are marketed as the future of money because of their security features. Unfortunately, these features can also be a negative as almost one-third of all Bitcoin exchange platforms were hacked, and that’s in 2016 alone. Once the cryptocurrency is stolen there’s no getting it back. Though regulation can’t stop all hacking, it can, however, communicate with exchanges and users to ensure proper security practices are adhered to. Insurance could also be offered to further protect funds.
Perhaps another benefit the community could get from regulation is the stabilisation of prices. Though cryptos would likely remain somewhat volatile, pump-and-dump groups and market manipulators would not be tolerated, leading to less wild swings in price.
One way enthusiasts can protect themselves is to be careful when selecting when and how they trade cryptocurrencies. To counter the increased risk, education is key. This is why it is worth investing into a knowledgeable community, such as Bitcoin.Live, that strives to educate and inform everyone about current and upcoming trends as well as equips with the basic skills to ensure safety while trading.
This and the market stabilising only proves Bitcoin and other cryptocurrencies are here to stay. For them to reach the mainstream masses, we will need to see some legislation put in place. Let’s hope that it is integrated carefully and professionally so the crypto community can continue to thrive.