Cryptocurrencies have been around for a while now, but they aren’t all that popular yet. There are only about 2,000 digital tokens in circulation right now, and that number is increasing daily. Some think that this means cryptocurrencies will never catch on as a mainstream payment or investment vehicle because it’s still too difficult to use them effectively.
But if you decide to invest in some crypto coins (or even mine them), you should know how they work to ensure your money isn’t lost forever!
The recent growth of cryptocurrencies and digital tokens spread through initial coin offerings, or ICOs, has created new opportunities and risks for investors, regulators, and the companies involved.
Who Is Investing in Cryptocurrencies?
The popularity of ICOs has grown in recent years because they allow companies to raise funds without using traditional venture capital firms or angel investors. Instead, entrepreneurs with an idea for a new product launch will create an initial coin offering (ICO), which allows people who don’t know them personally or have no vested interest in their success.
With more countries beginning to adopt cryptocurrency regulation on everything from initial coin offerings to digital currency exchanges, the use of cryptocurrencies is beginning to emerge from the shadows and into the mainstream. Many argue that this step is necessary for the long-term survival of any cryptocurrency.
While some countries are already regulating cryptocurrencies like Bitcoin or Ethereum, others have yet to take a stand on how they want their citizens to use these currencies. While many countries may not consider regulation necessary just yet due to its infancy stage in development (both technologically speaking as well as legally), there’s no doubt that it will happen eventually—and we can’t wait until then!
Some Cryptocurrencies Are Regulated
New currencies are being issued almost every day now, but very few of them are actually approved by a real government authority anywhere in the world. This is because there is no way to know if these new cryptocurrencies will last for more than a few years—or even if they can be trusted to exist at all!
In order to ensure that your money is safe and sound, you should only invest in a cryptocurrency that has been officially endorsed by an authorized body like The Bank Of England or The European Central Bank (ECB). These organizations control all kinds of finance around the world and have made it their mission to make sure that everyone’s money stays safe from fraudsters and scammers who want nothing more than your hard-earned cash!
Lack of Regulation
You are at risk of losing all of your money if something goes wrong with their systems. Real-time enforcement capabilities need to be built into cryptocurrency systems. The most popular ones right now can’t do this yet.
In fact, this is exactly what happened in January 2019 when hackers stole $5 million worth of cryptocurrency from Bitfinex — an exchange where investors could buy Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) or other cryptocurrencies using fiat currency like USD or EURO as payment method. The company decided not to reimburse customers who lost their investments because it couldn’t guarantee 100% protection against bad actors on its platform.
Governments around the world have been cautious about using cryptocurrencies as an official form of payment or as an investment vehicle, but several countries are starting to take steps toward regulating them. In some cases, these regulations will make it illegal to trade in cryptocurrencies without permission (as in China), while in others, they’ll require licensing before trading can begin.
In addition to these actions being taken by individual countries, two major international bodies are currently working on cryptocurrency regulation: The Financial Action Task Force (FATF) and G20 Finance Ministers’ Meeting on Financing Risk Management (FMM). Both groups have expressed concern over how fast cryptocurrency markets grow and whether they can be adequately policed by national governments alone—the latter especially given their decentralized nature and lack of central authority oversight.
Cryptocurrencies could be much safer if they were properly regulated.
Regulation is one of the most important factors in making cryptocurrencies more secure. Regulation can help reduce fraud and scams, protect consumers, and increase cryptocurrency confidence.
But some experts say otherwise. They view the regulation of crypto against the very principle crypto was introduced in the first place. While speaking on his YouTube channel, The Moon, Carl Runefelt says, Bitcoin is the only non-political money in the world. Remember guys your bank money can get frozen, your gold can get confiscated, but Bitcoin remains whether you’re in Slovenia or Sweden or Dubai. No matter where you are, Bitcoin is always online, always working for you and everyone else.”
The world is changing, and that means that the relationship between cryptocurrency and regulation is going to keep changing too. We can’t wait for regulators to figure out what they want or need—we have to make sure they know by showing them our work. In short: if you’re making money from cryptocurrencies, you need regulations!