Cryptocurrency is a familiar term to those who are aware of Bitcoin. Although it has become a global phenomenon in the modern technology-driven world, many do not understand what exactly the term with suffix ‘currency’ is.
First things first, Bitcoin isn’t the only cryptocurrency we have today. In fact, there are cryptocurrencies that use cryptographic protocols to encrypt data transfers. Although cryptocurrencies are not like the currencies that we use in the real world, they are digital assets that store a form of investment.
One more thing that differentiates these digital currencies from the real ones is the sudden change in their prices. If cryptocurrency news and articles of the last few months are considered, then it can be noticed that cryptocurrency prices keep on fluctuating every hour. For example- At the beginning of 2017, Bitcoin prices were as low as $1,000. By the end of 2017, they reached a whopping $20,000. But the currency didn’t have good days for a long time. Right now, one Bitcoin is equal to $5,313.
Crypto Regulation: Do We Really Need It?
There could be crypto regulations that help have control over the digital currencies. Increasing regulation is being considered as a major driver in today’s crypto bear market. However, there is a lack in the cryptocurrency sector. It is because there is not any central authority that governs cryptocurrencies or controls them. Due to these circumstances, these digital currencies face extreme volatility that further leads to sudden fluctuation in their prices. However, this is also a trait of digital currency.
Does the crypto-coin market really need crypto regulation and policies? To get an answer to the question, we need to consider the pros and cons of the regulation.
Advantages Of Crypto Regulation
Although crypto regulation of today’s crypto market does not have a fixed entity to govern it, there should be a central authority to control the policies. This comes with a long list of advantages that tell why it is essential to have the regulations. Below are some of them:
In the form of a central authority, cryptocurrencies get a medium to educate people about these digital values. With the help of crypto regulation, people can easily understand what cryptocurrencies are and how they work. In addition to learning about the currencies’ working, they can also use the medium to understand how to get cryptocurrencies and spend them.
Before digging deeper into the use of cryptocurrencies, it is necessary for individuals to learn what these currencies are and what blockchain technology is. The knowledge will not just enlighten them about the technologies but also save them from scams and frauds in the name of a cryptocurrency. Apart from that, regulations will also help get the digital currency in cryptocurrency news and make people aware of risks associated with it.
Although there are cryptocurrency exchanges to prove the currency’s legal work, not all of them are trustworthy. It is because many of the businesses using cryptocurrencies do not fully follow current regulations, and this put investors’ money at risk. For example- Some rogue businesses and criminals are using these digital assets as a secure way to fund their illegal activities.
Crypto regulation will help have control over these illegal activities and craft strict actions for those who are using the medium to fund their illegal work.
The popularity of cryptocurrencies is increasing with each passing day. They are believed to be a part of the mainstream currency world in the next few years. But it is also necessary to accept the fact that today’s cryptocurrencies aren’t secure. Bitcoin exchange platform hacks in the recent past are an example of security concerns in the cryptocurrency market. Once the cryptocurrency is hacked, there is no point of getting it back.
With the help of crypto regulation, there could be security practices to stop the hacking and make cryptocurrencies safe for investors.
Stable Crypto Prices
One of the major reasons many individuals choose to stay away from cryptocurrencies is the sudden fluctuation in their prices. Bitcoin is a prime example in this case. Crypto regulation can help design a process to stabilize the prices of cryptocurrencies.
Disadvantages Of Crypto Regulation
Like everything else, crypto regulation also has some cons. They tell that the legislation can also have some unfavourable impact on the mainstream currency world. Below are some of them:
Abuse of Power
An individual or a group of people (regulators) who have the power to control crypto regulation can use or alter the policies for self-interest. In addition, these regulators can also modify the regulations to offer advantages to one party, rather than thinking of all individuals linked to the sectors.
As crypto is not regulated before, there are chances that crypto regulation can have a negative impact. It could range from a limit on cryptocurrencies to their usage in the mainstream world. It is also possible that people stop using the digital currency for their work.
Conclusion- Do We Need Crypto Regulation
Crypto regulation has its fair share of pros and cons. It can help design a system that tells what cryptocurrencies are and how they are going to work in future. However, this process can also lead to some sort of negative consequences. On the other hand, the regulation can provide digital currencies with increased security and stable pricing. But it also gives power to only a handful of individuals who can modify terms for self-interest.
However, the benefits of crypto regulation are more crucial than disadvantages. They can help bring cryptocurrencies in the mainstream market where people from different sectors can take the benefit of crypto coin market to manage their funds in a new and innovative way. The legislation will make these digital currencies a part of the actual world and let businesses thrive quickly and effectively. In the end, it can be said that we need crypto regulation to ensure that cryptocurrencies thrive in future and become a part of our lives.
Source of video: bis.org