- The definition acceptable for Bitcoin and cryptocurrencies could greatly impact regulations in the future.
- Bitcoin’s slow network has hindered it from transitioning into a payment system.
Since inception Bitcoin has left many, including regulators around the world unsure of its identity. Is Bitcoin a currency? Yes, one can use it to buy, sell as well as price goods and services just like the US dollar and the euro.
Is Bitcoin a commodity? Well, this is the discussion of the decade. A majority of cryptocurrencies fall in this category based on their mode of issuance; via initial coin offerings (ICOs). Some cryptos are utilized in representing shares in online projects.
The debate seems abstract at the moment, with little basis on the core foundation of the universe of finance. However, it continues to appeal to many including economists as well as lawyers, for they believe that it could impact the future of cryptos.
The definition of Bitcoin and other digital assets is likely to set the framework for regulation in the future around the globe. In other words, the rules that would be accorded to them will determine if they will get the potential to transform into mainstream assets.
Regulators in the United States have stated that they find cryptocurrencies to have elements of both commodities and securities. However, the majority of economies around the world are yet to come up with guidelines regarding digital assets. On the other hand, the European Union is expected to come up with a guideline in 2020, likely to give cryptocurrencies space within existing regulatory frameworks or maybe formulate new guidelines for the new asset class.
The way Bitcoin is regulated will also determine its performance and mainstream adoption in the future. Commodities are mostly left without close regulations. However, securities operate within a close distance from regulators in terms of ensuring price transparency, trade reports as well as markets misapplication.
Originally, Bitcoin was released as an alternative means of payment. Unfortunately, ten years down the line is has not been bestowed the currency status carried by the dollar or euro. Its volatility makes it less considered as a store of value while its slow network deals a blow in the goal of becoming an accepted payment system.
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