Will Crypto Regulation Kill the Initial Idea of Bitcoin?

Asia Blockchain Review
May 18, 2019

From Financial Crisis, An Idea Is Born

The global crisis in 2008 showed us that our economic and financial systems are weak and manipulated by corporations and governments. That crisis was the catalyst that brought about the birth of Bitcoin in 2009.

Since then, Bitcoin has grown as a currency for the Internet, thanks to its privacy and digital features. Nobody knows exactly who was behind Bitcoin, but it was a revolution in the eyes of many, offering the possibility of financial freedom for millions of people across the globe. As no one could control it, stop it or change it, the rules of the game changed: you’re either in or you’re out.

Bull and Bust Generate Buzz

For the last few years, cryptocurrency and blockchain have disrupted the technology industry.

We experienced the “Crypto Bull Run in 2017,” when for the entire year, all types of cryptocurrencies rose and rose with seemingly no end in sight.

In 2018, we experienced the longest “Crypto Winter” ever recorded, which extended into 2019, where for more than 365 days, we have seen the continuous decline of all cryptocurrencies.

Both these phases have brought huge interest into the crypto world from entrepreneurs, governments, bad actors, and other people around the world.

Changing the Game

Before 2017, most crypto-related activities could be carried out anonymously, including:

  • Mining
  • Buying
  • Selling
  • Spending
  • Investing
  • Earning

But since 2017, the rules have been changing. Due to the significant interest and profits being made by many, governments are setting jurisdictions and have started regulating cryptocurrency.  

  • In countries such as the United States & Germany, you must now pay capital gains tax on your crypto profits.
  • In Venezuela, you must pay a fee to the government if you transfer or receive more than 600 USD equivalent in cryptocurrency.
  • To participate in any Initial Coin Offering (ICO) or fundraiser, you must first pass Know-Your-Customer (KYC) protocols.
  • To buy or sell crypto over the counter, you must pass KYC protocols.
  • To trade crypto on exchanges you must pass KYC protocols.

If you have done any of these activities, you are being watched, from that moment onwards. Bitcoin, Ethereum and 95% of other protocols use a public blockchain, and once you have made a transaction, your personal data and your activity will be traceable.

Private Blockchain Protocols

(Information below represents personal opinion and does not constitute investment advice)

Significantly increased attention on cryptocurrency around the world from governments suggests that in roughly two to three years’ time, cryptocurrency will be fully regulated and traceable. Therefore, the original vision of Bitcoin, of a decentralized currency that gives the people control over their own money, will be transformed and regulated, killing the dream of freedom and control over one’s own finances.

But let’s talk about the remaining 5% of private blockchain protocols. These blockchains have been created and engineered in such a way that all your data and transactions remain anonymous and untraceable.

These are the most well-known private protocols:

The Monero and Zcash teams didn’t build blockchain protocols from scratch; they forked existing ones and began implementing new features.

… as it is with human evolution, every new generation takes something from the previous to become faster, smarter, more advanced.

As you can see, both protocols are giants, and, according to Bloomberg findings, private blockchain protocols will draw even more attention over the next few years when Bitcoin, Ethereum and other private protocols will be pushed and regulated by governments.

As I mentioned above, Monero and ZCASH are giants in the private protocol field. But as it is with human evolution, every new generation takes something from the previous to become faster, smarter, more advanced. There are a slew of new startups aiming to catch up to the trend and work on improvements of the private protocols to compete in this crypto field.

The one that got my attention is Vincoin Cash an evolutionary fork of Monero which is going to bring a new generation of blockchain and private protocols to the battlefield.

Market Cap (USD) Price (USD) Circulating Supply (coins)
Vincoin Cash ~ 4,000,000 ~ 0.50 ~ 8,000,000


Vincoin Cash in not the only untraceable protocol startup, but is by far one of the most interesting to date. However, feel free to discuss other options and share them in the comments below. There are currently only a few giants and some small fish in this field. It is my opinion that the giants may be a safer investment, but come with fewer potential gains than a startup that has greater opportunities for early investors to capitalize on early adoption.

To illustrate this point, let’s use math and basic logic:

  • For ZCash to double in current market value, an injection of around 300 million USD is required.
  • For Monero, 800 million USD would be required to double in valuation.
  • For Vincoin Cash to double, an injection of only 4 million USD is required.
  • Usually, hard forks pull up to 10% of their mother protocol, which makes startups potentially even more interesting. In our example, pulling even 5% of Monero’s value would be significant.

Status of Cryptocurrency Regulation by Country

Conclusion

The regulations are almost here. The United States, Japan, Korea, Europe, Singapore many developed countries and economies are closing in on establishing legal frameworks for crypto regulation.

I believe in the next couple of years, crypto regulations will span the entire globe. We will be issued local currencies, and all transactions, tradings, investments will be tracked by governments and policed.  

Unfortunately, the native idea of Bitcoin as a free, uncontrolled currency could die under regulatory pressures. At the same time, crypto enthusiasts who work on creating and developing private protocols give us some hope.

I believe that we still have a chance of keeping cryptocurrency the way Satoshi Nakamoto’s made it Free, Untraceable, Uncontrolled.


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