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Through forums and blogs of cryptocurrencies, the word of the month is "capitulation". With bitcoins under $ 5,000 for the first time since October 2017, community figures have turned to each other in a spiral to point the finger, while crypto-enthusiasts are at war with detractors who see this as a victory for legal currencies. Although this might not be the end for bitcoin and company, the incident stresses the question of whether it is worth trying to bring cryptocurrencies into the mainstream.
There are many reasons to consider cryptocurrencies with concern, including immense volatility (the bitcoin has lost 30 percent of its value during the week), fraud and manipulation, the fact that a number of initial offers of coins they turned out to be scams and their use as money launders and terrorists. But, as it is endemic in the technology sector, regulation has struggled to keep up. The "self-regulation" proposal was not lacking: the Virtual Commodity Association of the Winklevoss twins, set up in August to provide "a self-regulating organization sponsored by the industry", has been quiet even though the crypt has collapsed.
The authorities have been more proactive. The UK Financial Regulatory Authority has launched a ban on cryptocurrency derivatives, while a UK Select Committee has denounced cryptocurrency markets as the "Wild West" and has called for regulation. The Securities and Futures Commission in Hong Kong this month said it was considering plans to regulate cryptocurrency trade. In September, a report by the New York Attorney General's Office recalled industry for conflicts of interest and insufficient protection from market manipulation.
But bringing the virtual currency world online is a thankless task, given the decentralized nature of cryptocurrencies. The Financial Action Task Force, a global anti-money laundering agency, concluded that "the components of a virtual currency system may be in jurisdictions that do not have adequate [anti-money laundering] "Controls. Elsewhere, crypts are emerging to circumvent bans: Ledger, an encrypted hardware manufacturer, has launched regional operations in Hong Kong to meet the Chinese demand for offshore cryptographic assets, bypassing a law against ownership of such assets on the continent.
Cryptocurrencies have provided valuable lessons, however. They showed dissatisfaction with current payment systems and pushed banks and governments to conclude that money must become more digital. The International Monetary Fund has suggested the digital currencies of the Central Bank, an exclusively digital form of fiat currency that would seek to combine the ease of use of liquidity with a central bank registry system to verify transactions. The implementation of CBDCs requires significant tests: an IMF document acknowledged that they could be popular especially in countries with less secure banks and fear that adoption could lead to executions of digital banks. But CBDCs may one day offer consumers a faster, cheaper and safer alternative to physical money and credit cards.
Blockchain technologies may have other uses, although the case is not proven. The Interbank Information Network, launched in October of last year, is testing the blockchain for difficult transactions between more than 75 banks. Walmart is experimenting with the blockchain to track some products.
Crypto may not be dead, but bitcoin dreams of being the future of money should be. Its intrinsic contradictions, between being a medium of exchange or a speculative resource, are too great. But the debate that has sparked on the potential of digital currencies is precious.
