Upcoming Challenges for the Bitcoin Industry in 2015
- One of the main challenges facing the bitcoin industry in 2015 is the regulatory uncertainty.
One of the main challenges facing the Bitcoin industry is the regulatory uncertainty. Most countries are still formulating the regulatory framework on the use of Bitcoin and other Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term. The New York Department of Financial Services is working on the second draft of BitLicense after receiving many comments from the industry; Singapore has committed to regulating certain types of companies in the future; Russia has banned bitcoin transactions; the UK eliminates tax on bitcoin trading; other countries may adopt the wait-and-see attitude in view of the upcoming BitLicense proposal.
With the lack of clear regulatory guidelines, potential investors and larger companies are putting on hold the idea of investing in Bitcoin for fear of breaching future regulations. The lack of protection for consumers transacting in bitcoin also hinders a more widespread adoption. Hence, more clarity is needed around Bitcoin and Bitcoin intermediaries: in terms of regulating exchanges and payment processors, taxation on bitcoin transactions and profits, whether an individual within a country is allowed to transact in bitcoin and consumer protection mechanisms.
Bitcoin Price
The public views bitcoin price as the main indication of its value. Bitcoin price was down by 40% in Q3 and has been hovering between USD 350 and 400 since, a far cry from its peak of USD 1,200 almost a year ago. This stagnant and relatively low bitcoin price has negative implications on the perceived value of bitcoin, which may create a vicious cycle: the declining bitcoin price reduces its attractiveness to investors and lowers the demand and thus may reduce the price even further.
However, bitcoin price is not and should not be the only indicator of the development and adoption of Bitcoin. Other measures such as the dollar amount of VC investment in Bitcoin companies as well as the number of merchants accepting bitcoin should also be used as an indication on the value of bitcoin. Over 100,000 merchants have currently accepted bitcoin and all-time Bitcoin VC investment sums up to around USD 320 million. Based on the 2014 run rate, the investment amount is on track to exceed that of the internet in 1995. Other measures are increasing too: development as measured by open source projects and “forks” of the core Bitcoin code; press interest and mentions; permeation into the public consciousness and of course the network effect as more startups create an ecosystem. These all contribute to the value of the network.
Lack of Specific Education to the General Public
Another challenge is the lack of effective targeted education. The word "adoption" has been poorly defined and many people think that successful adoption means everyone everywhere using it. That is not the point and will never be the case. In reality Bitcoin has niches and adds much more value to certain users and groups of people than others. There have traditionally been gross generalisations regarding the benefits of Bitcoin, whereas different segments will find different reasons to use bitcoin over alternatives.
Online merchants who have no bank accounts will be able to tap a new global market as they are able to receive Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term from anyone, anywhere with Bitcoin; consumers with no credit cards will be able to purchase things online; high volume traders will appreciate the volatility in the price of bitcoin and arbitrageurs will take advantage of the market inefficiency between different exchanges and currency pairs. Therefore, Bitcoin education needs to be a lot more focused and targeted in order to gain wider acceptance and adoption. It’s standard sales stuff: talk about the specific benefits to specific groups, rather than the general features.
One of the main challenges facing the Bitcoin industry is the regulatory uncertainty. Most countries are still formulating the regulatory framework on the use of Bitcoin and other Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term. The New York Department of Financial Services is working on the second draft of BitLicense after receiving many comments from the industry; Singapore has committed to regulating certain types of companies in the future; Russia has banned bitcoin transactions; the UK eliminates tax on bitcoin trading; other countries may adopt the wait-and-see attitude in view of the upcoming BitLicense proposal.
With the lack of clear regulatory guidelines, potential investors and larger companies are putting on hold the idea of investing in Bitcoin for fear of breaching future regulations. The lack of protection for consumers transacting in bitcoin also hinders a more widespread adoption. Hence, more clarity is needed around Bitcoin and Bitcoin intermediaries: in terms of regulating exchanges and payment processors, taxation on bitcoin transactions and profits, whether an individual within a country is allowed to transact in bitcoin and consumer protection mechanisms.
Bitcoin Price
The public views bitcoin price as the main indication of its value. Bitcoin price was down by 40% in Q3 and has been hovering between USD 350 and 400 since, a far cry from its peak of USD 1,200 almost a year ago. This stagnant and relatively low bitcoin price has negative implications on the perceived value of bitcoin, which may create a vicious cycle: the declining bitcoin price reduces its attractiveness to investors and lowers the demand and thus may reduce the price even further.
However, bitcoin price is not and should not be the only indicator of the development and adoption of Bitcoin. Other measures such as the dollar amount of VC investment in Bitcoin companies as well as the number of merchants accepting bitcoin should also be used as an indication on the value of bitcoin. Over 100,000 merchants have currently accepted bitcoin and all-time Bitcoin VC investment sums up to around USD 320 million. Based on the 2014 run rate, the investment amount is on track to exceed that of the internet in 1995. Other measures are increasing too: development as measured by open source projects and “forks” of the core Bitcoin code; press interest and mentions; permeation into the public consciousness and of course the network effect as more startups create an ecosystem. These all contribute to the value of the network.
Lack of Specific Education to the General Public
Another challenge is the lack of effective targeted education. The word "adoption" has been poorly defined and many people think that successful adoption means everyone everywhere using it. That is not the point and will never be the case. In reality Bitcoin has niches and adds much more value to certain users and groups of people than others. There have traditionally been gross generalisations regarding the benefits of Bitcoin, whereas different segments will find different reasons to use bitcoin over alternatives.
Online merchants who have no bank accounts will be able to tap a new global market as they are able to receive Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term from anyone, anywhere with Bitcoin; consumers with no credit cards will be able to purchase things online; high volume traders will appreciate the volatility in the price of bitcoin and arbitrageurs will take advantage of the market inefficiency between different exchanges and currency pairs. Therefore, Bitcoin education needs to be a lot more focused and targeted in order to gain wider acceptance and adoption. It’s standard sales stuff: talk about the specific benefits to specific groups, rather than the general features.