Brief History on Bitcoin
Bitcoin has existed since 2009 and the technology it is built on has roots going back even further. Two examples of these were B-Money (1998) and Bit Gold (1998), which were formulated but never fully developed. Both Bit Gold and B-Money have been called direct precursors to the Bitcoin architecture. In fact, if you had invested just $30 in Bitcoin the year it was first publicly available, you would now be richer to the tune of $60 million.
With so much money to be made in the world of cryptocurrency, it should be a no-brainer to invest right? Well, it depends on your appetite for risk because prices tend to fluctuate due to unforeseen market activity like fraudulent ICOs and cyber attacks. But the most common reason for price fluctuation is the fear of regulation.
For example, on January 23rd, one of the largest cryptocurrency markets in the world, South Korea, announced regulatory plans to ban anonymous cryptocurrency trading in order to control cryptocurrency speculation. Not long after this announcement, CoinMarketCap removed several South Korean exchanges from its website, resulting in around $20 billion wiped off of Ripple’s market cap.
About one week later, India’s government warned it would not recognize cyber-cash as legal tender, and signaled an outright ban on the use of Bitcoin and other cryptocurrencies for illegal purposes. As a result of these massive regulation headlines, the price of bitcoin fell nearly 30% within two weeks.
Is Cryptocurrency a Good Investment?
Despite the poor performance of bitcoin, the potential usefulness of cryptocurrencies and the blockchain cannot be ignored.
In fact, Amazon, one of the largest companies in the world with a $695 billion market cap, has registered three new domains related to cryptocurrency, prompting speculation it may be about to announce a move into the sector. Once a big name player like Amazon moves into the space, cryptocurrency adoption will no longer be an issue.
And let’s not forget, even though bitcoin has seen some volatility due to news on regulation, bitcoin as an investment still made you over 600% return from February 2017 ($1000) to now ($7600).
Investment Strategy: Prepare for Regulation
So is cryptocurrency still a good investment? The answer is yes. But instead of selling your coins whenever news on cryptocurrency regulation is announced, embrace and prepare for regulation.
One company that is staying ahead of the game is HybridBlock; they voluntarily open their books up to internal audits and comply with legal requirements, making sure when the regulation wave hits the crypto world they will be in compliance. HybridBlock complies with AML regulations and requires two forms of identification to verify accounts and permit bank deposits.
Another company that is preparing for the regulation wave is Quoine. Quoine is the first global crypto fintech company to receive an official license from the Japan Financial Services Agency (JFSA) on Friday, 29th September 2017.
Bitstamp was founded in 2011 as an alternative to MtGox, and is now the largest exchange by trading volume. Its banking is based in Slovenia but the exchanges headquarters are in London. In order to remain as reputable as possible to the authorities and to its users, Bitstamp complies with AML regulations and requires two forms of identification to verify accounts and permit bank deposits. When withdrawing money to a bank account, further details may be requested, depending on circumstances.
Further reading: Where to Buy Cryptocurrencies for Beginners 2018