Should You Use Libra? – Understanding the True Intentions behind Facebook’s Cryptocurrency

Facebook Libra

Facebook has made it official, confirming suspicions about a blockchain project they’ve been working on for more than a year. Libra is Facebook’s next step to becoming a dominant force in FinTech sector.

Crypto-users saw this as a nod to cryptocurrency as an established payment option, but for some, it’s just a way to lure people away from traditional banks and payment services.

One Currency for Everyone

Throughout history world currencies has been associated with the most powerful countries like the British pound sterling and the US dollar. Whoever has control of the globally accepted currency has the potential of affecting the world’s economy.

Facebook’s announcement cannot be taken lightly. With roughly 30% of the world’s population currently on Facebook, it’s not hard to see why Libra can cause massive disruption in the financial sector. Crypto users estimated to be around 25 million pales in comparison to the sheer volume of would-be Libra users including the unbanked and the underserved.

This could lead to the rise of a “supercurrency” where only one currency exists for cashless, online, and cross-border transactions. As technology improves and more people gain access to free internet, digital currency and cashless transactions will become the norm, and fiat currency as we know it will cease to exist.

How Libra Works in a Nutshell

We’ve seen some attempts to create a borderless currency in the late 20th century like the gold-backed dollar, or more recently cryptocurrencies like Bitcoin and Ethereum. Facebook decides to do things differently.

Libra aims to be the first borderless currency with the stability of state-backed fiat and the security features of blockchain technology. It’s a stable coin like Tether and TrueUSD, but with some level of decentralization that employs validator nodes (a total of 100 nodes) to process transactions. There are currently 28 which includes Visa, Mastercard, Coinbase, Paypal, Ebay, and Facebook.

Libra will also address the problem of slow transaction throughputs encountered by decentralized currencies like Bitcoin and Ethereum. Whereas Bitcoin could only make seven transactions per second (TPS), Libra can process up to a thousand. That’s five times faster than PayPal, although much slower compared to Visa’s 1700 to 4000 TPS. Still, Libra is a significant improvement to many large cap cryptocurrencies in terms of transaction speed.

Unlike most coins listed on Coinmarketcap, Libra isn’t meant to be traded but is a way to store wealth outside of banks and financial institutions and making cashless transactions. Facebook, along with Libra’s founding members will put together a “Libra reserve” where all of people’s money will be pooled together creating an immense repository of all the world’s currencies. It’s like Facebook having its own “superbank.” This can have severe consequences on traditional banking and, if successful, could lead to closures.

Calibra – Facebook’s Wallet &Payment Processor

Facebook will have its own wallet and payment processing app known as “Calibra” which is distinct from the social media platform and the messaging app. Hence, all transactions made by users on the app are not mingled with user activity on social media. Facebook assures data will be stored anonymously for research purposes and will not be used to market goods and services to people on social media. Thus, if you buy a new pair of sports shoes with Libra through your Calibra wallet, you won’t be bombarded with ads of sports items on social media. Whatever shows up on your newsfeed still depends on your browsing activity.

This, in a way, prevents another Cambridge Analytica type of situation where tech giants and corporations could take advantage of user information for their own good. Meanwhile, this would encourage a lot of businesses to advertise on Facebook as more people get attracted to the idea of using instant,cashless, borderless transactions much cheaper than traditional bank transfers and payment services. Question is, can we trust Facebook with our money and spending habits?

A Friend or Foe of the Government

By allowing Facebook to gain access to the financial sector, governments can achieve what it failed to do with permission-less, decentralized, censorship-resistant currencies like Bitcoin, Ethereum, or the untraceable privacy coin like Monero. Unlike Bitcoin, Libra is a “permissioned” coin in which validator nodes (the founding members of Libra Association), have been selected based on a given criteria. These are usually multinational companies with at least $10 million staked on the Libra project.

This puts every node under the radar, and governments could very easily knock on their doors and make demands of them. Think of what this could mean to your privacy. Would it be worth the risk in exchange for a much cheaper and faster way to use money? For the 1.7 billion unbanked, and the rest of the world’s population suffering from high fees, it is a much better alternative to being denied from or being constantly ripped off with fees that are considered discriminatory. They just want to use money the way it supposed to work.

On the other hand, Facebook Libra could turn into a “mono-bank” where all of the world’s currency is sucked into. Facebook can turn the table on traditional financial institutions by depriving them of customers on the payments side. Furthermore, if Facebook succeeds in holding the majority of people’s wealth in Libra reserve, banks will slowly lose their ability as informed lenders while Libra gains the upper hand by becoming a lender itself.

Conclusion

Facebook is playing the long game in its bid to become the most dominant force in cashless, borderless transactions and online advertising. This is a crucial moment which will decide the fate of many traditional financial institutions. They can either make concessions or slug it out to the bitter end. But ultimately, it will depend on us, users, from all countries across the globe whether Facebook’s vision of putting us all under one currency will come to fruition.

Decentralization Is the Way Forward for Cryptocurrency Mining – Here’s Why

Cryptocurrency mining – the power behind our decentralized currencies – has reached a fork in the road of its young life. Giga Watt filed for bankruptcy in late November this year, Genesis Mining is facing hard times, and Bitmain’s future is in limbo.

But despite massive depreciation, and miners leaving the cryptocurrency space en masse, it’s not all doom and gloom for cryptocurrency as a whole. Institutional investors are coming into the crypto space, and the recent decline in mining could be good for persistent miners, mining farms and pools worldwide.

 

How Centralized Mining Failed

If there’s one lesson for miners to learn from in this bear market, it is keeping down the cost of mining, with emphasis on efficiency over scaling up. Over the course of the year, mining has been increasingly unprofitable even for some enterprise miners. There are a number of compounding factors for the dry spell such as:

  • recent decline in the cryptocurrency market
  • strict regulations and increased power rates for cryptocurrency mining
  • rapid increase in mining difficulty – faster than market demand and cryptocurrency adoption
  • cost of outlays in running the business increase with size (e.g. bigger facilities, cooling systems, power consumption, hiring more employees for maintenance and upkeep)

Diminishing returns over a period of time (e.g., Bitcoin rewards halve every four years) coupled with volatility in the cryptocurrency markets makes it very risky for miners to scale up beyond a certain threshold. In many cases, mining profitability is only as good as the market conditions. The recent turn of events with the price of cryptocurrency, and the equivalent of approximately 1.3 million Antminer S9 units turning off as of late proves how large-scale miners have become so dependent on cryptocurrency markets in terms of mining profitability.

The arms race towards bigger mining facilities and acquiring more efficient but expensive mining hardware also tends to backfire for some mining businesses who are now struggling to pay off their debts. State regulations have also put a lot of strain to the mining industry by imposing higher rates for cryptocurrency mining. This, along with rapid increase in network hash rate/difficulty, and a long drawn-out bear market spells disaster for many businesses in the cryptocurrency mining industry, particularly those who have overspent with expectation of higher returns through market demand and cryptocurrency adoption.

Enterprise-level miners might have increased their mining power with a large share of the network hash rate which might have previously worked but because of the way proof-of-work cryptocurrencies such as Bitcoin are built large-scale miners are running into difficulties. Miners are finding with increased network hash rate there will come a point where mining and maintenance costs start to eat up their gains unless they find access to abundant or much cheaper energy source as soon as possible, or if cryptocurrency continues to gain widespread adoption. (Imagine if every miner in the world does the same thing and Bitcoin suddenly drops to $1,000. How long can these enterprise miners hold on until Bitcoin goes back up again to $20,000 or until mining difficulty drops significantly lower?)

Lastly, centralized mining puts a lot of strain to the power grid that governments won’t have much of a choice but impose exorbitant rates for mining operations in order to “force” miners to slow down, or run the risk of overloading the grid, severely affecting all other industries in the country. The only option for large-scale miners at this point is scaling down and help redistribute hash power to the cryptocurrency network, e.g. shipping their mining rigs to places with abundant and more affordable energy source. (In Venezuela, it only costs $531 to mine Bitcoin).

 

Why Decentralized Mining Is Crucial for the Cryptocurrency Space

More secure compared to centralized mining. Centralization of mining power misses the whole point of having a decentralized cryptocurrency such as Bitcoin. Cryptocurrency mining was never meant to be a centralized endeavor, but a shared obligation to secure the network where one’s willingness to share computing power to mine transactions and prevent double spend attacks is rewarded with cryptocurrency. Centralization creates weaknesses to an inherently secure decentralized network by establishing a single point of failure and opens up the possibility of double spends and censoring transactions. (This inevitably results in weaker adoption and/or the cryptocurrency’s demise.)

Distributes risks and rewards to miners. Higher hash rates do make a difference who gets the mining reward. But at the end of the day, it all boils down to probability. Suppose every miner in the world mines at exactly the same hash rate. The way Bitcoin’s algorithm was designed meant that there is no particular way to tell who will be the first to find the next hash since they would all be making random guesses at a given rate. Higher hash rates increases the likelihood of being the first to make the right guess, but so is the risk (power consumption = money lost). A better alternative to mining centralization is by using mining pools or by having small mining farms spread out to places where cost of running the mining the business is much cheaper.

 Distributes power consumption. With less centralization in mining power, miners will be able to utilize cheaper electricity instead of relying solely on the power grid. It would also encourage miners to be more creative and explore ways to make cryptocurrency mining a lot greener, or, as mentioned earlier, find places with abundant supply of energy source (e.g. hydroelectric, geothermal, solar, etc.)

 

Final Thoughts

The 2018 bear market has been an eye-opener for all of us, not only in terms of volatility and value of cryptocurrency, but also the dangers and consequences of going beyond what is intended for in cryptocurrency mining – decentralized and cost-effective. Bitcoin was just as secure back when people mined them in their PCs and laptops as it is today with more powerful ASIC miners and GPUs. It’s just a matter of perspective. Hopefully, this year has brought us some important lessons to help us with our journey in cryptocurrency for the year 2019.

Should You Be Worried About The State of Cryptocurrency?

Markets crash every so often, whether it’s stock, commodity, or cryptocurrency. Just recently, Amazon stock has lost 25% of its value in a span of 3 months. Nearly 40% of Facebook’s share value has been wiped out since July; Google lost 19%. Apple is down by 26% since October. By and large, 2018 has been particularly bearish, not just for cryptocurrencies, but tech stocks as well – quite the opposite of what we’ve seen last year.

 

“What Goes Up Must Come Down” 

Market cycles are normal with any type of investment vehicle. The price crash on both cryptocurrency and stock in Q4 strongly suggests that we are indeed going through a market downturn or a bear market. In other words, the fact that both cryptocurrency and investment funds are down suggests there isn’t anything wrong with cryptocurrency but instead it’s just a natural market fluctuation.

Bitcoin, has lost around 75% of its market price from its all-time high of $19,309 in December 2017. Speculation for Bitcoin’s price is considered as one of the main reasons for the run-up resulting in a price crash after further gains became unattainable.

 

Making the Most from a Price Crash

Market volatile in cryptocurrency is something experienced traders and investors have all been accustomed to. Truth is, what we’re seeing right now with Bitcoin and other cryptocurrencies is just one of the many examples of a price downturn in recent years. Here are some ways we can get by in a cryptocurrency bear market. As always, please note that this is not investment advice and is written solely for informative purposes.

HODL. Hodling is another one of those internet sensations that came about because of the immediacy of Twitter. For the unaware, it is essentially a “buy and hold” strategy used by cryptocurrency users and investors. Hodling can take a lot of patience, and mental resolve, with an almost stoical attitude towards cryptocurrency investment. In other words, they’re not into crypto just for the short-term gain, but look forward to using it more as it slowly reaches worldwide adoption.

Dollar Cost Averaging (DCA). Regarded as one of the most conservative and safer approach to cryptocurrency investing, which allows investors to accumulate crypto-assets over time. Similar to hodling, DCA requires discipline, and the ability to stick to the plan regardless of price actions in the market. It usually involves a fixed amount spread over a period of weeks or months. DCA can be considered as a “contrarian” approach to investing because investors can have more during a bear market and buy less during a bull market – the opposite of what most people tend to do which is giving in to fear of missing out (FOMO) and herd mentality.

Entry and Exit Strategies. A lot of cryptocurrency traders have an exit strategy such as placing stop loss orders below their entry points in order to minimize potential losses. Here’s an example of how an entry and exit strategy can be used during a bear market. Unfortunately, there is no guarantee that investors would be able to recoup their losses since it would all depend on future price actions. We’ll be using Bitcoin in this particular scenario.

From this hypothetical situation, it is entirely possible for traders and investors to recoup or even take some profit off of the bear market. However, it’s also possible for Bitcoin markets to go much deeper, exacerbating one’s losses and making it more difficult to recover. We don’t recommend this method unless you truly understand the cryptocurrency market and are quite familiar working with exchanges. Also, please bear in mind that selling cryptocurrencies for profit is a taxable event under state laws regarding cryptocurrencies.

Educate Yourself about Cryptocurrency. Spending some time learning about this emerging technology could be one of your most valuable investments in this day and age. Cryptocurrency will continue to evolve and will be more accessible to millions of users in years to come. Read books about cryptocurrency, enroll in blockchain and cryptocurrency courses, and steer clear from get-rich-quick schemes and cryptocurrency scams. Having a better grasp of cryptocurrency and its underlying technology (blockchain) helps clear out all the noise and drama surrounding cryptocurrency and allows you to make wise investment decisions.

 

 

**Please note that this is not investment advice and should no way be treated as such. It is for informational purposes only. Before you make any trade or investment you should consult a licensed financial advisor who is familiar with your current situation.

Banks and Blockchain Transactions – Which Is Better?

Many cryptocurrency critics believe that blockchain transactions are far too slow to be ever applicable for mass adoption within banking and financial institutions, failing to understand blockchain and cryptocurrency technology is still in its infancy.  In this post, we’re going to look at the pros and cons of each system and explore the future of payment systems.

Banks and payment systems look in some ways more efficient than blockchain transactions, but in many cases, they’re actually more involved. In fact, as soon as they’re being used to make cross-border payments and settlements, they start to reveal some flaws. They, too, can become slow, expensive, or worse – they can lock people out through no fault of their own, and for no apparent reason.

Bank-to-bank transactions through SWIFT network take three to five working days to reach its destination, which is extremely slow by cryptocurrency standards. In contrast, an average person with no connection to a bank or money transfer service can securely send and receive Bitcoin anywhere around the world with just a smartphone and a stable Internet connection in as short as ten to fifteen minutes without the risk of being censored out by the system.

Wire transfers cost somewhere between $10 to $30, plus 6% spread on foreign exchanges. In other words, if you’re sending $5,000 from Australia to Canada, you’ll pay as much as $330 on that single transaction. This doesn’t account for differences in rates from country to country (fees for sending money from US to Africa can be as high as 15%).

Bitcoin’s transaction fees peak at around $55 in December 2017 during a massive buying spree. But most of the time, sending Bitcoin to someone anywhere around the world will only cost a fraction of a dollar, to as high as $10 depending on priority and network load. And since it’s considered a borderless, global currency, users can forget about foreign exchange rates.

Companies like Abra have been using Bitcoin as a cheaper alternative to international settlement systems. Interestingly, certain banks like the ones in the Philippines allow remittances using Bitcoin, and recipients can take their pesos straight out of the ATM without an ATM card or a bank account.

Within the cryptocurrency ecosystem, on-chain and off-chain implementations can have a significant impact both on energy consumption and transaction throughputs. As a general rule, the more it shifts toward decentralization, the more challenges it needs to deal with scaling; but as more features become centralized, the more scalable it becomes. How these challenges will be overcome in the next couple of decades is anybody’s guess.

Some of the proposed on-chain solutions is the move towards proof-of-stake consensus algorithm (e.g., Ethereum Casper), and delegated proof-of-stake (e.g. EOS and Cardano). Off-chain solution include Lightning Network (e.g. Bitcoin), and side-chains. Improving the blockchain’s inner workings not only helps with efficiency, but also makes energy consumption more manageable.

 

Conclusion

Cryptocurrency might not be as nimble as people would expect from banks when it comes to local micro-transactions. However, we’ve seen some progress lately, with SegWit adoption being used in 40% of all Bitcoin transactions, enabling shorter confirmation times, significantly lower fees, and Lightning Network integration. Users can start experimenting with Lightning wallets in their beta version (Eclair, Zap, RawTX, etc.), and buy small stuff from online stores like the ones made by Blockstream specifically for that purpose.

Cryptocurrency will only get better as time goes by, and we’ve already seen some progress from greener solutions, to mining hardware, and software development. There’s no limit to the number of ways cryptocurrency can solve many of its challenges. All it takes is an open mind and a little bit of creativity.

 

The Top Cryptocurrency and Blockchain Projects in 2018

There’s been a change in the outlook for cryptocurrency during the past few months. People seldom talk about the markets or the price of Bitcoin. Volatility has been causing a lot of uncertainty, and mainstream adoption came to a virtual standstill.

Nonetheless, the cryptocurrency space showed remarkable resilience as blockchain projects continue to expand its borders with more lateral thinking and “out-of-the-box” blockchain solutions. We’ll explore some of their use-cases and find out whether these currencies and platforms are the next big thing.

 

Why People Invest in These Projects

Despite the recent lull in cryptocurrency trading and mining, blockchain projects and ICOs are very much in the business for 2018. Investors and tech companies remain optimistic about the future of the cryptocurrency space amidst tightening restrictions and negativity. In fact, according to Coindesk, the amount of money raised in ICOs in the first quarter alone exceeded the total amount last year.

Most ICOs and blockchain projects didn’t end up well for a lot of investors (more than 90% failed to deliver). However, there are a few examples like Binance and EOS which turned out as good investments. Binance became one of the leading cryptocurrency exchanges with a BNB market cap of over $1 billion – the second most valuable token on Coinmarketcap. EOS, on the other hand had a successful, albeit controversial mainnet launch, and is now a full-fledged decentralized application platform second only to Ethereum.

Smart investors consider the current state of affairs as a golden opportunity to hunt for new projects with the greatest potential, particularly in their early stages when they are mostly undervalued. Investing early on has the advantage of maximum gains with the least amount of exposure. For instance, a hundred dollars’ worth of investments at ten cents per token won’t break the bank if things go south. But if it turns out to be a real investment, gains will be exponential (e.g., BNB and EOS tokens are worth a hundred times more than their initial price in 2017)

 

 

Blockchain Projects to Watch for in 2018

Finding a good investment can be a real challenge since we’re dealing with dozens of new blockchain projects and ICOs every month. If you’re lucky enough, you might be able to land on some big winners from a list of projects. But before anything else, please bear in mind that this is not investment advice, and you are solely responsible for any gains or losses. That said, here are five of the most talked-about blockchain projects in 2018.

 

Zilliqa (ZIL). Launched in January, the project puts a lot of work in building a highly scalable decentralized platform using a method known as “sharding.” Unlike in Bitcoin, each node will be working in parallel within a group of nodes called “shard,” verifying a subset of all the transactions occurring at the same time (also called parallel processing). Sharding works perfectly in many centralized systems (Ultima Online, Google, etc.). However, it presents an immense technical challenge when applied on a decentralized environment. Ethereum has been working hard on it as part of its on-chain scaling solution in hopes of solving the security/scalability/decentralization trilemma. Zilliqa’s entry into the whole sharding scene threatens to steal the thunder from Ethereum by becoming the first to come up with a workable solution. Some estimates it to be around January 2019. Key features include:

  • faster transaction throughputs (speed improves as the network grows)
  • employs practical Byzantine Fault Tolerance as a consensus mechanism
  • reduced energy consumption (mining is spaced a hundred blocks apart)
  • maintains a decentralized network structure (a new shard is created for every 600 nodes)

Basic Attention Token (BAT). Cutting the middleman goes beyond peer-to-peer transactions to include decentralized, blockchain-based digital advertising in the form of an open-source, ad-free browser with its own currency. Brave Browser is one of today’s hottest Internet browsing software because it allows users to block ads and trackers completely free. In fact, as many as 3 million people have already been using Brave, becoming one of Google Play’s top ten in the Android browser category. The project is moving towards the creation a decentralized advertising platform using its own currency – Basic Attention Token – to incentivize both content creation and user attention. It works in some ways like Google Ads but in a more transparent and decentralized manner. The key advantages of BAT from an investor’s point of view include:

  • good potential for adoption (sold out BAT worth $35 million in 30 seconds)
  • strong support from the community (Brave browsing experience receive a lot of positive feedback from users)
  • a solid team of experienced developers (founded by no less than the co-founder of Mozilla, Firefox, and creator of JavaScript)

Kin (KIN). Canadian messaging app company Kik Interactive is making headway into cryptocurrency adoption with the launching of Kinecosystem. The company hopes to build a community of users and developers sharing resources, and making digital goods and services. However, unlike most blockchain startups with no real users, Kin’s integration into the Kik Messenger meant its value could potentially rise with over 300 million active users.  The company is now moving towards the next phase, inviting all developers and content creators in building the ecosystem for large KIN payouts. Gains will take time, but you might want to consider its advantages, namely:

  • KIN’s practical use-case as a digital currency on an existing application (Kik has been in use since 2010)
  • user base is mostly made up of digital-natives (teens, millennials, and active mobile users)
  • Kik’s emphasis on anonymity

DeepBrain Chain (DBC). Blockchain companies like DeepBrain Chain sees decentralization as the future of the AI industry. Development of AI applications use up a huge amount of computing power. DeepBrain Chain works by utilizing computational resources across millions of nodes on the neural network in building AI applications which are then published onto the blockchain. Nodes that successfully deploy mirror images will receive payouts in DBC. It plans on migrating out of NEO to its own mainnet in Q4, with its own consensus algorithm (proof of importance and delegated proof of stake). The goal is to become the deep learning machine for the AI industry. Successful adoption is achievable through:

  • growth in people’s interest in the AI industry
  • reduced computational cost of AI companies through resource-sharing
  • secure, decentralized method of storing AI information.

Wormhole. Bitcoin Cash might soon be able to run smart contracts through its proposed protocol layer known as Wormhole. Developers plan on forking the Omni Layer to create a platform for smart contracts on top of Bitcoin Cash. Much of it is still in the works as of this moment, but news is, they’re going to issue a token named “Wormhole Cash.” Investors and crypto-enthusiasts are keeping track of its progress since it is expected to have a very high demand upon release.

 

Conclusion

The cryptocurrency space has been constantly evolving even as the noise and the hype surrounding cryptocurrency have mostly faded. Cryptocurrency is here to stay, and we’ll be seeing more projects in the near future that will bridge the gap between the average user and blockchain technology.

Should Governments Regulate Cryptocurrencies?

Cryptocurrencies exploded on the scene in 2010 and ever since then people haven’t known what quite to make of this new way of exchanging goods and services – one that, in the future, may take over fiat currency. Governments are having an even tougher time trying to regulate cryptocurrencies to ensure they don’t get abused by criminal organizations.

But probably more important to most central governments is their own financial interests in having a strong fiat currency. In fact, the greatest fear among regulators is not whether cryptocurrencies can be used for making secure transactions or if it has real value, but on people putting their wealth in places where governments have no access or control over. If this happens, fiat currencies will lose value or utility over time as more and more people trade cash for cryptocurrencies, thereby removing its grip on the economy and on people’s lives.

 

Gateways for Cryptocurrencies 

Cryptocurrencies and decentralized blockchain ledgers have very little need for regulations by themselves. Nor do they need any government regulation or human intervention to function properly and securely. Decentralized blockchain ledgers are, in fact, in many ways more secure than any centralized bank or financial institution.

The main purpose of regulations, as viewed by the governments, seems to gravitate on the government’s role as custodians of fiat currencies, making sure nothing gets past online wallets, brokers, and exchanges without proper authorization and identification, which is in keeping with statutory laws preventing unlawful use of fiat currency (FinCEN, AML, CFT, KYC etc.).

Some countries implement even more stringent rules against cryptocurrencies, from banning the creation of new currencies through ICOs, to the outright prohibition of cryptocurrency mining. However, many of these restrictions and prohibitions achieved nothing except encourage more people to dodge regulations by going deeper underground.

These factors make legislation for cryptocurrencies a tough balancing act, since it has to serve its purpose of protecting the people against the unlawful use of money without making it too prohibitive as to encourage clandestine exchanges, creation, and distribution of cryptocurrencies.

 

Gateway #1: Online Wallets and Exchanges

Governments, banks, and financial institutions came in to “regulate” this seemingly uncontrollable trading activity which involved using government-backed fiat currencies. In order for exchanges to operate unimpeded, they need to implement strict identification and verification procedures before granting certain privileges to subscribers such as increasing buying and trading limits and the ability to link their bank and/or credit card accounts to their wallet accounts.

Coinbase, Kraken, and Poloniex are well-known examples of online wallets and exchanges that implement KYC and other client verification procedures.

 

Gateway#2: Initial Coin Offerings (ICOs)

Investors and venture capitalists (VCs) saw the high stakes of creating tokens using blockchain technology. All that stands between them and making a fortune is finding and rallying the support from people and tech communities through the sale of equities in exchange for privileges as pioneers and early adopters of their newly created coin. In a span of nine years, there are over a thousand altcoins that have been created – and counting. Ethereum project is one of the few Initial Coin Offering (basically the same as a IPO) whose altcoin turned out to be a strong currency in the market.

ICOs has been a controversial topic in the cryptocurrency sphere. From the viewpoint of regulators, they saw the need to impose regulations for such investments because they place a lot of risk on people, especially with cryptocurrency’s volatility, unpredictability, and ICO’s susceptibility to scams. China and South Korea went as far as banning ICOs altogether, and other countries threatened to follow suit if the benefits fail to justify the risks, or if scams involving ICOs spins out of control. Of course, banning them outright is foolhardy, but these countries do need a better system of regulating them just like any other IPO.

 

Gateway #3: Cryptocurrency Mining

Miners are one of the strong pillars that upholds the integrity and security of cryptocurrency networks.

There are some mining regulations in most countries, while in a few places mining is explicitly prohibited. Regulations can be beneficial for several reasons. Some mining pools don’t generate enough profit to be considered sustainable for business while shady cloud mining services exist as actually Ponzi schemes. In some countries, the high cost of electricity is prohibitive enough to discourage people from mining.

For cloud mining companies, most of the burden comes from excessive regulations pertaining Money Service Business (MSB) or Money Transmitter Business (MTB) which must be complied with to legally receive payments via credit cards or bank transfers, and send payouts to their subscribers. Often the best recourse for these cloud mining companies is to move their businesses in countries which are more receptive to mining.

 

Limits of Government Regulations

There are plenty of ways violators can dodge restrictions, and fixing all the loopholes meant shutting down the entire network (or the Internet) or reverting to a centralized form of currency.

Whether or not these regulations could prevent unlawful use of cryptocurrencies is beside the point since many countries are still inconclusive about the effectiveness of anti-money laundering laws in preventing organized crimes, terrorism, and corruption.

Instead, governments should be focusing more on enforcing laws and tracking down wrongdoers without putting undue restrictions on every citizen whose lives depend on their ability to use fiat or cryptocurrencies.

People now have a choice. Whether or not cryptocurrencies will coexist as a better alternative to fiat currency or replace it altogether is something which people will have to decide for themselves.

 

Interested in mining? Learn the basics of cryptocurrency mining at CryptEdu.com or start  hassle-free cloud mining at Cryptmin.com today.