Bitcoin
Will Bitcoin Return to its Old Shine?
Bitcoin is having quite a rough year. After reaching an all-time high of $19,000 last December, the cryptocurrency shed off more than 80 percent value in the first eight months of 2018. A market correction, declining investor confidence, and bad press have been blamed for the price crash. But will bitcoin ever rise again?
Bitcoin first crossed below the $10,000 mark on February 1. Since then, the digital currency has only crossed the mark twice. Bitcoin came close to reaching the mark in the first week of May, but it never did.
History
Throughout bitcoin’s history, the cryptocurrency has had ups and downs. Some of the downs have been soul-crushing to investors. But on the bright side, the cryptocurrency has recovered from every single price dip. Is anything different in 2018?
Many financial experts believe bitcoin is undergoing a price correction as most digital assets do. And like with every market correction, a price surge follows. Bitcoin’s problems this year will most likely end with a rise in value. You can also check this infographic by Playcasinoonline.net.
After its bullish run in 2017, the cryptocurrency was expected to correct. Market corrections are commonplace in the stocks and bonds industries. It has happened before with bitcoin, and every crash was followed by a market rise. Although it has taken longer to rise past $10,000, that date will come.
Of course, the digital currency won’t gain value out of the blues. After regulatory threats by governments decrease, investor confidence on the cryptocurrency will increase. Increased adoption by banks and large financial institutions will also help bitcoin’s case. We may not know exactly when it will happen, but bitcoin’s correction will be followed by a rise in prices.
The Law of Supply and Demand
Bitcoin’s prices are determined purely by the law of supply of demand. Governments don’t put a price on the cryptocurrency. When the digital currency’s demand increases, its price increases because more people invest. When its demand decreases, its price reduces.
For the better part of this year, bitcoin’s demand has been low. That is evident in the huge number of people dumping the cryptocurrency. Despite the low demand, something else is happening that could save bitcoin’s value. Its supply is reducing at a fast pace.
Bitcoin’s pseudo-anonymous founder Satoshi Nakamoto set a limit to how many bitcoins will ever be mined. That number is 21 million. As of April, 17 million bitcoins were mined. The remaining 20 percent will be mined in the cause of the next two decades.
This year, bitcoin’s price has been dropping for a number of reasons. Some of the factors like low investor confidence will fade with time. Once that is done, investors will be met with high prices as bitcoin’s supply decrease. The longer the bear market continues, the higher the likelihood of bitcoin’s value rising later on.
Post Regulatory Threats
Bitcoin’s biggest nightmare is the threat of regulation all around the world. From Beijing to Seoul, Washington to London, governments are considering enforcing regulations on crypto. China already banned two crucial industries in the crypto world last year: ICOs and trading exchanges.
Earlier in the year, the Reuters reported that the Chinese government was threatening to ban any form of centralised trading and related businesses in the country. South Korea has also been introducing regulations that target bitcoin traders. The Japanese government and the US have also been contemplating similar moves.
China, South Korea, Japan, and the US ranked among the top 5 countries with high bitcoin trading volumes. Regulations in the countries have been influencing the industry hugely. As an example, some crypto’s prices in South Korea went down 20 percent after the government claimed it would ban crypto trading. After the statement was corrected, EOS prices went up 40 percent within hours.
Since the US Securities and Exchange Commission hasn’t made any clear regulations about bitcoin yet, the cryptocurrency is likely to continue struggling. Once regulations are put in place, bitcoin’s price will change. Most governments don’t intend to ban bitcoin entirely. In fact, most countries have been finding ways to incorporate bitcoin into their countries.
Once the uncertainty surrounding bitcoin’s regulation declines, bitcoin’s price will resume a steady path. While we can’t be certain which direction the coin goes, it’s highly likely it will rise. Many institutional investors are simply holding back to see what regulations SEC introduces. If the US and other countries back the cryptocurrency with favorable rules, it will rise again.
Low Volatility
Bitcoin’s has always had a volatility problem since it was launched. With no regulations in place, the digital currency’s prices are solely determined by what buyers want to pay. The prices have always gone sharply and then fallen in equal measures.
In recent months, bitcoin’s value seems to have stabilised. Maybe the cryptocurrency has finally corrected. But in the past six months, bitcoin has not lost more than 20 percent value in one month. Investors who have always feared the coin’s volatility problem are giving it a try.
Of course, many investors are still nervous about investing now that the cryptocurrency is on a bear run. But once the cryptocurrency resumes a bullish run again, investors will feel more confident to invest.
Disappointing ICOs and Altcoins
As bitcoin grew in 2016, the initial coin offering industry was also booming. ICOs represent a financial model where crypto startups sell in-house coins in exchange for more established cryptocurrencies. While the industry had been growing sharply, things seem to have changed.
Investors no longer view ICOs and small altcoins as shortcuts to make big bucks in the crypto industry. A series of scam ICOs and underperforming altcoins has been shaking investor confidence in cryptocurrencies. Instead, the focus is getting back to bitcoin and other established cryptocurrencies. If more ICOs continue to disappoint, more people will get back to bitcoin and its value will rise.
To Conclude
Bitcoin has lost more than 80 percent its value since it peaked nearly $20,000 last year. There have been many theories about why it lost so much value. One theory pertains governments threatening to regulate bitcoin operations. Some argue the crypto is simply having a market correction and will get back to its old shine.
When and if that happens is anyone’s guess. But given that there is a lot of support for bitcoin-related technologies, its price will likely increase in the coming months.
Statistics, examples, and ways to legally use cryptocurrency
October 1, 2013, was a turbulent day for San Francisco Public Library. A dozen FBI agents pretending to be usual visitors surrounded a man sitting at one of the tables, took his laptop and put a pair of handcuffs on his hands. That man was Ross Ulbricht, founder of Silk Road – the largest darknet marketplace for drug dealers, killers, and other criminals. The seizure of Ulbricht was supposed to tackle the illegal online trade, but, as the news site DeepDotWeb wrote, the bust was “the best advertising the darknet markets could have hoped for”. The reputation of cryptocurrency also suffers from associations with terrorists, who sometimes use it for their needs. How big is the real scale of the problem? And how many legal ways to use crypto exist? ChangeNOW has dived into the topic – and suggests you an overview of the current state of the problem.
Highlights:
- The drugs trade volume using cryptocurrency is relatively large
- Crypto was a significant reason why a part of drug sales migrated to the web, though stays yet not viable and anonymous enough for dealers (same as for terrorists)
- As efficient use of blockchain technology requires good infrastructure, crypto remains not suitable enough for many terrorist groups
- However, some terrorists are trying to adjust to anonymity threats and hold fundraising in crypto
- Legal ways to use cryptocurrency include dozens and vary from IT services to car rentals
Crypto & Drugs & Rock’n’Roll
The total volume of the online drug market using cryptocurrency is around $1 billion. It is located in the darknet, which provides an attractive, profitable, and mostly secure environment for drug dealers. Cryptocurrency, in turn, allows making payments that are hard to be tracked by authorities. This is how blockchain technology has helped to bring a big part of drug sales online from the streets. And it’s not only about drugs themselves – many legal opioid drugs are illegally sold here, too.
However, cryptocurrency is not always as secure and anonymous as it is thought to be. The information about any transaction ever made stays forever in the blockchain, which makes the system way more transparent than cash payments. This is a significant limitation for using crypto in illegal purposes.
According to the University of Technology Sydney, about 46% of criminal activity of each year is connected to Bitcoin. As for the drug sale itself, trade volumes in crypto keep rising, but the percent of Bitcoin drug transactions out of all transactions goes down. This means Bitcoin is more frequently used for legitimate purposes.
What cryptocurrency is used for drug sales most often? Surprisingly, privacy coins such as Monero are used only for 4% of transactions. Due to its pioneer position, Bitcoin is used in 76% of all deals despite all its anonymity risks.
The main problem for drug dealers using crypto is to turn their income into cash. This move remains complicated and insecure. Most cryptocurrency exchanges have instruments to define whether a transaction is coming from a suspicious source like the darknet. The rise of Monero use in the online drug market will hinder such tracking. However, for the reasons listed above, crypto is unlikely to completely replace regular cash in drug sales in the foreseeable future.
Cryptoterrorism
The views on how much cryptocurrency is used and will be used by terrorists vary widely. While some claim that terrorists have no infrastructure to use it and the methods are not secure enough, others argue that they are learning fast and adjust to crypto rapidly. Let’s see what both sides say.
Not actively using, unclear future
Lack of appropriate infrastructure, inability to use crypto. Most terrorist groups settle in the Middle East region, especially on its remote and war-torn territories. The vast majority of roads and technological infrastructure have been destroyed. In such circumstances, cash remains the most common and convenient way to pay and fundraise. Imagine a gun seller in a Syrian village – does it look like he has a tool to accept Monero?
Anonymity threats. Given the relative transparency of blockchain mentioned above, crypto might remain too unsafe for terrorists. Miners can see any potential terrorist money exchange while checking transactions, and it’s not too hard to see who sends them money. It can change with the rising use rate of privacy coins, but the ability to spend such money remains questionable.
Increased attention to crypto by the authorities. As the number of transactions keeps rising, more regulatory bodies’ attention gets focused on cryptocurrency, which apparently makes terrorists nervous and cautious.
Problems of specific currencies. While top cryptocurrencies like Bitcoin receive much regulatory attention, others remain marginal and unreliable because of a lack of support. Conflicts and uncertainty lower the trust to such cryptocurrencies – yes, even terrorists’ trust.
Using actively now, increasingly in the future
Terrorists seem to be rapidly learning to escape from tracking in blockchain. Several years ago it was easy to find any address or transaction made for a terrorists’ fundraiser. Today they use well organized and finely designed websites, where detailed video tutorials show how to donate money anonymously. Unique Bitcoin addresses and other crypto tricks are used to preserve security. Analysts from intelligence services claim there’s only going to be more such cases. And, of course, privacy coins are a “great opportunity” for terrorists too.
Shift to cryptocurrency is a reaction to economic sanctions. ISIS has lost most of its territory and resources, Hamas has been sanctioned by the West. Having been cut off from all main financial institutes, terrorist groups had to find other pathways for their financial activities – and cryptocurrency appeared to be the best substitute.
There might be difficulties and inconveniences, and the number of terrorists using crypto is yet unknown – but as we can see, digital money in terrorism is reality. Same as in drugs. And this is what cryptocurrency is notorious for, lacking trust among millions of people. The reputation of some of the exchange services only adds to this mistrust – ChangeNOW has carried out a special investigation on how such platforms may cheat their clients. But can you buy anything besides heroin and firearms with your crypto? What about pizza or a concert ticket?
Only Antarctica left
Cryptwerk, a platform monitoring actual use cases of different cryptocurrencies, says there are about 3500 ways to spend Bitcoin and more than 800 for Monero today. They range from music services to car rentals, from buying clothes to hotel booking services, and from sports bets to virtual tours.
Organizations accepting cryptocurrency are located on all continents besides Antarctica (what could be a better place for crypto than a continent without governments and countries though?). Mostly, in the USA and Central Europe. Bitcoin as the largest cryptocurrency is relatively widespread in India and Southeast Asia.
As this is a whole another topic, ChangeNOW will issue a post dedicated to use cases of cryptocurrencies. As it will be more detailed, who knows – maybe you’ll find a pizza right by that you could pay for from your crypto wallet!
This article was contributed by Jeremy from ChangeNow.
Buroka is a new breed of cryptocurrency exchange for Africa! Currently operating in Nigeria, Buroka was designed to fulfill the needs of modern Africans. Buroka allows customers to buy and sell Bitcoin with Naira via Local Transfers and cash deposits at the bank. In this Buroka review, you will learn more about the exchange and how you can use it to buy bitcoin in Nigeria.
How to Buy Bitcoin on Buroka
Step 1: Account Creation
To create an account, visit Buroka.com and hit the “Register” button. This will lead you to a page where you will be asked to fill in your personal information, including your name, email address, and password. Like any other serious exchange, Boruka will ask you for your ID, Proof of Address, and to take a selfie with your ID to eliminate fraud.
Step 2: Fund Your Account
Funding your account on the platform is straightforward. You can deposit either via bank transfer or at any bank branch. Make sure to use a unique reference code given to you by Buroka deposit system.
Step 3: Buying and Selling BTC
Once your deposit has been credited to your account you can immediately buy your Bitcoin. The buying and selling tab is located on the top right corner of the dashboard. There you can input the amount of bitcoin you want to buy. Once you do that, you then click on the “BUY BTC” button.
Step 4: Storing Your BTC
After buying BTC, Buroka provides users with the option of either storing bitcoin on the platform in a BitGo wallet or any other wallet of their choice.
Currently, Buroka only supports bitcoin (BTC). However, the exchange plans to include other cryptocurrencies going forward.
Security
Buroka exchange makes use of Two-Factor Authentication (2FA). 2FA provides an extra layer of protection for users. With the 2FA in place, an extra piece of information is needed before login into the platform or making any withdrawals.
In addition, Buroka’s platform is also protected using the latest security technology, including web-socket and API protocols that allow for a fast and secure order processing. Buroka also makes use of a well-updated SSL certificate, which makes it easy to detect a phishing attempt.
To further ensure that clients’ funds are secure, Buroka operates segregated accounts. These accounts are held with trusted banks so that clients can enjoy an extra layer of security provided by the banking system.
Conclusion
Buroka is a relatively new Bitcoin exchange with a well-designed, user-friendly interface. The Bitcoin trading platform provides several deposit options, which is attractive for Nigerian Bitcoin traders, as well as competitive market rates for both buyers and sellers.
If you are looking to buy or sell bitcoin in Nigeria, you can give Buroka a try.
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