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4 Issues Facing Cryptocurrency Today

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Hashim Akram
Senior .NET & Blockchain Specialist

It's fair to say it has been an exciting year for crypto.

From Bitcoin's peak in December at £14,450 to new contenders such as Ethereum, Ripple and Bitcoin Cash entering the running.

Cryptocurrencies have been the darling of investors and speculators everywhere.

One of our Berlin-based Meetups was focused on Blockchain recently (you can watch the replay of the Live Stream here).

But it may not be all sunshine and rainbows ahead.

Navigating the cryptocurrency realm requires skill & an understanding of the subtleties of the market; it also comes with significant risk.

From government regulations to security, within this article, we'll look at some of the big problems facing cryptocurrencies.

Let's begin.

 

Government regulation is inevitable

Government reactions to cryptocurrencies have ranged from aggressive to indifference, with investors and speculators cautiously monitoring international developments. Just recently, Head of the International Monetary Fund, Christine Lagarde, stated that regulatory action from the international community on cryptocurrencies is "inevitable". 

Christine also said:

"We are actively engaging in anti-money laundering and countering the financing of terrorism. And that reinforces our determination to work on those two directions."

In late January, world leaders gathered for the Davos World Economic Forum, with several sharing the same sentiment, according to a report by CoinDesk; including the French President Emmanuel Macron, UK Prime Minister Theresa May, and the secretary of the U.S. Treasury Department Steven Mnuchin.

South Korea is reported to have recently banned the trade of bitcoin and other digital currencies anonymously but says it does not intend to ban cryptocurrency exchanges.

The next subject is often overlooked.

 

There's an issue of inheritance

The unregulated nature of bitcoin means that without the keys needed to view a relative’s digital wallet, there’s no way of accessing their funds if they are to pass away.

For example:

Five years ago, Matthew Moody died during an observational flight, and at the time had been mining bitcoin. His father, Michael Moody, has spent the last three years trying to find out how many bitcoins his son has and how to find them.

However, without knowing every single address, he is unable to locate every piece of currency.

Moody has since called for better education about how to ensure investments are secured properly for those individuals mining bitcoin.

I'm sure you'd already know the next one.

 

There's a security risk

Bitcoin exchanges are digital and therefore vulnerable to hackers, operational glitches and malware.


 

By targeting and hacking a cryptocurrency exchange, hackers can gain access to thousands of accounts and digital wallets where the cryptocurrencies are stored.

One infamous example was the Mt. Gox hacking incident in 2014, which saw the Japanese exchange close down after millions of dollars in bitcoin were stolen. 

And the one everyone is talking about:

 

There's a market risk

As with any investment, the value of cryptocurrencies can fluctuate.

This should be no surprise.

Within their short time, they've seen fierce swings in value and an extreme sensitivity to headlines, due to the high number of informal and amateur investors.


 

If there's continued resistance to the adoption of bitcoin and other cryptocurrencies, they may lose value.

Experts, investors and budding traders will continue to speculate as to the future of cryptocurrencies. All we can know for sure is that it's going to be an interesting journey.