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Bitcoin 2022: Will Cryptocurrencies Like Bitcoin, Ethereum Need To Be Regulated?

The year 2021 saw the cryptocurrency market triple in value to almost $2 trillion, according to figures taken from an article in the Wall Street Journal online, entitled: “The $2 Trillion Cryptocurrency Market Is Drawing Interest From Investors, Scrutiny From U.S. Regulators” by Paul Kiernan.

Source: Pexels

Furthermore, according to Kieran, such an increase in the value and performance of cryptocurrencies like Bitcoin has attracted millions of investors in the United States of America.

According to the Wall Street Journal: “As cryptocurrencies go mainstream, prices for bitcoin and other digital tokens are often displayed on cable-news tickers and finance apps as though they were just like regular stocks, bonds or oil futures”. However, unlike traditional commodities and forms of exchange – cryptocurrencies like bitcoin, remain largely unregulated.

An Explanation

Indeed, one of the key beliefs of those who advocate or promote cryptocurrencies like bitcoin is that with the use of technology – intermediaries that are found with traditional currencies and commodities – are replaced and there is no need for the factor of ‘trust’ to enter the equation, that is according to The Wall Street Journal. As such many transactions using cryptocurrencies like bitcoin are largely unregulated, even though transfers on their blockchain are stored on a database.

Furthermore, according to The Wall Street Journal – one should never rule out the human element involved in financial transactions or investments – even in the case of cryptocurrencies like bitcoin as there is a small- ” group of programmers, known as maintainers, who can change the underlying code in case bugs emerge’.

In this lies the potential for a conflict of interest, and investors being defrauded. As such, even though, as Kieran further argues that there is no need for a middleman in such blockchain transactions – there is, thus, still such potential for disaster.

Need For Regulations

For these reasons, such cryptocurrencies pose many challenges and difficulties for financial regulators in the United States of America. Such an agency’s main goal would be to ensure that its citizens are not defrauded and that no illegal activity is going on in transactions or money laundering. Just how such a currency will be regulated, though – remains to be seen.

 

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