Bitcoin is not new but has been climbing in price recently. Few people remember how much it had been halved in half. Now it’s not dropping back down.
According to latest reports from Bloomberg, the coin’s value has reached $9,252 as of today and has a run-rate of $12,000 per day on average. Despite the extremely high price, cryptocurrency experts are unsure of the scalability of the cryptocurrency.
As Felix Salmon points out, there is so much supply of the cryptocurrency it makes it hard to mine and the currency is, at present, not usable to send around. “It should be noted that the rise in price is incredibly unlikely in itself to be some sort of sign of a new bubble,” says Salmon. “But it is a sign that the enthusiasts who got the market so excited are now more confident that the blockchain could absorb its own supply.”
But the main cause for concern is that of scalability, as provided by CoinMarketCap.com, which shows that the total supply of Bitcoin, not including “Satoshi”, as it is known, is 1.31 billion coins. Taking into account the possibility of future coins, this would bring the total figure to 1.85 billion.
The trouble is that so far there hasn’t been any mainstream implementation of the blockchain technology behind Bitcoin. There has been a massive growth in the supply of tokens and currently, users only have 2% of the original. That means there is huge potential for cryptocurrencies to expand and as of now there is no solution other than having more people make investments in it.
According to one of the oldest bitcoin proponents, “Venture capitalists, I believe, will invest in the common denominator – I’m not going to say who it is…because what I’ve seen in the blockchain space is that later investors seem to bear the burden of their earlier investments. It won’t happen in China, or wherever the party is – only now it’s California,” says Denton Jones, co-founder of The Blockchain Cryptocurrency Fund.
Investing in the future seems like a bold move, especially given that there are factors that may significantly affect the use of cryptocurrencies and prevent the currency’s wider adoption.
One of these factors is the rising tides of capital flight from the Asia region. According to Platts, the net capital outflow of China in Q2 was the highest since 2014, when its trade war with the US was at its peak. Although, according to CoinMarketCap, the Chinese regime was still planning to invite foreign investment, even with increased tariffs, most observers see the massive gross capital outflow as worrying. In fact, it is causing a currency war in Asia.
A second potential concern for those involved in the crypto sector is the potential for the cryptocurrency to be abused. As reported by Expert Bitcoin Trader, the majority of currency theft is perpetrated by insiders, acting either for profit or as a method of introducing the cryptocurrency to the community.
The South Korean website eEgispite Korea found that computers found to be used by at least three major cybercriminal groups were able to access a host of professional software called Rustracker. Rustracker uses a procedure called STOCKtoROK, which allows hackers to get trading data from cryptocurrency trading accounts, while turning off its tracking capabilities once you have bought or sold your cryptocurrency.
This security vulnerability is an issue because first and foremost, it creates an environment in which fraud is considerably easier to commit. It is possible that through several cyberattacks, criminals are able to completely bypass one of the biggest blocks to buying bitcoins, called the Blockcluster – that is, the Internet of Things: as reported by Gizmodo.
As the crypto sector continues to develop and expands in new ways, the regulations surrounding it will need to evolve in order to protect investors from fraudulent investments. And until then, “if you can’t beat them, join them”, says Leo Mazur, the CEO of online trading firm CuttaParanoid.com.