Can Bitcoin be used for illicit activities?Well, seeing as Bitcoin is money and money have been used for legal and unlawful activities all throughout history, then technically yes it can be. However, Bitcoin surpasses any bank or credit card in their crime against unauthorized uses of money. Bitcoin has created innovative payment systems, and these systems have more benefits than they do drawbacks.
Bitcoin was designed to make money more secure and to act as a protection against financial crime. Take for instance that Bitcoins are not able to be counterfeited. A consumer is going to be in complete control of their payments, and there are not going to be charges that just randomly show up like what can happen with a credit card.
Some big concerns are that Bitcoin is going to attract more criminals being that it is used in making payments that are not only private but irreversible. However, what most people do not realize is that these features are found with cash and wire transfers. Bitcoin is subjected to regulations that are similar to those that are already in place for financial systems that already exist.
Does Bitcoin have the option of being regulated?The protocol that Bitcoin follows is not going to be able to be modified without all of the consumers agreeing on all of the decisions. Should special rights be assigned to a local authority to govern the rules of the Bitcoin network then it is going to result in a catastrophe because it is not possible in a practical sense.
Organizations that are rich can invest in hardware used in mining in order to control half of the computing power of the network which will give them the power to block or reverse negotiations that are recently made. But, there is no guarantee that this power is going to be kept by them because it is going to require an investment that is larger than all of the other miners that are on the Bitcoin blockchain.
It is possible to regulate Bitcoin’s use though. Bitcoin has the option of being utilized for a great number of things, and some of this stuff are going to be considered illicit based on where the miner is located and the laws of that jurisdiction. Bitcoin should not be thought of in any other way other than a tool that can be subjected to the regulations of the area in which it is being used.
The restrictive laws can make it difficult to use Bitcoin which is going to cause it to be hard to determine the percentage of consumers who are going to continue to use the platform. Also, the government can decide that they want to ban Bitcoin in order to prevent domestic businesses and markets from shifting into other countries. The biggest challenge is going to be to develop solutions that are going to be efficient and effective without impairing the growth of the new markets and businesses that are starting up thanks to Bitcoin.
Is Bitcoin subjected to taxes?Since Bitcoin is not a fiduciary currency, it is possible that you are not going to have to pay taxes on Bitcoin. But, keep in mind that there is a lot of legislation in place that can cause a tax to be put on Bitcoin.
What is going to determine the price of Bitcoins?
The price is going to be decided by the supply and demand of Bitcoins. Whenever the market goes up, the price is going to increase, and whenever it falls, the price will fall. There are going to be a limited number of Bitcoins that are in production, and the new coins are going to be created at a rate that is not only decreasing but predictable as well. This means that the demand is going to continue to follow the level of inflation in order to attempt to keep the price stable. Since Bitcoin is still a small market, it is not going to take a lot of money to move the market in one direction or another which is why the price of Bitcoins is still volatile.
Can Bitcoins become worthless?
Yes. There are all kinds of stories about the various currencies that have failed over time, and now they are no longer used. Just because other currencies have failed mainly due to hyperinflation which is not possible with Bitcoin. But, there are technical failures that can occur. A good rule of thumb is that no currency is going to be absolutely safe from any failures. While Bitcoin has proven to be stable since it started, there is still a lot of room for Bitcoin to grow or to fail. No one knows what the future of Bitcoin is going to bring.
Is Bitcoin a bubble?
Just because the price goes up fast does not mean that there is a bubble. When an artificial overvaluation occurs, it is going to cause a sudden downward correction which is going to constitute as a bubble. There are going to be choices made based on a human’s action and as more and more miners make decisions, the more the price is going to fluctuate and cause the market to try and seek some sort of price discovery. There are going to be reasons for these changes which can end up causing miners to lose their confidence in Bitcoin.
One of the biggest dissimilarity s between price and worth will not be based on the fundamentals of the economy, but instead an increase in press coverage, which will, in turn, stimulate demand, a sense of uncertainty, and greed.