The major connotation associated with bitcoin in the mainstream media has largely been negative since its inception back in 2008. The prime reasons for this negative aura around bitcoin include its usage in illegal activities such as money laundering and the scams associated with it.
Bitcoin’s bull-run of 2017 attracted a lot of investors towards cryptocurrencies. Many people stepped into this nascent and uncertain world, investing in various altcoins with the hopes of making quick buck if the prices rose up. Capitalizing on this, negative elements seeped into the crypto space with the aim of scamming people with the deception of getting huge profits. One of the biggest channels to scam investors was the Initial Coin Offering (ICO) in 2017.
The ICO boom began with a lot of crypto projects offering their tokens to the public on some price tag thus raising huge investment. Amid the real ones, fake ICOs become one of the favorite ways for negative elements in this nascent space to siphon off some money from the investors. This lack of security soon became prominent as many investors lost huge amounts of money bringing the attention of regulators like the United States Securities and Exchange Commission (SEC).
As the SEC took notice, many projects got into the trouble while registering their tokens with the regulatory body. The famous messaging app Kik also became entangled in controversy recently as the SEC sued it. Kik had raised a staggering $100 million in its ICO without registering its token.
With ICO boom gone, Security Token Offerings (STO) have now risen to prominence. STO’s involve registering with the regulators before the offering thus providing a security blanket to the investors. This proves that security has now become one of the hottest priorities in the crypto world as millions of dollars are floating around in purely internet-based currencies.
BlockPublisher recently got in touch with the Chief Executive Officer of BlockSafe Technologies, George Waller, as he answered the question relating to the factors controlling bitcoin’s price in the market stating:
“While a number of factors affect the performance of Bitcoin and other cryptocurrencies, security continues to be a primary one. We cannot ignore that the recent uptick in Bitcoin comes in the shadows of major crypto exchange hacks, including Bithumb ($13 million) and DragonEx ($7 million), Binance ($40 million). These losses, coupled with the fear of potential future losses, can directly translate to the global loss of investor confidence. Bitcoin and any other cryptocurrency will only be able to maintain stability or uptrends, once crypto wallets, exchanges and blockchains are completely secure”.
The world of cryptocurrencies is purely internet-based. There is no physical backing of bitcoin and the asset is purely digital. Its price is speculation-based, which means people believing that the asset is worth something and will be worth something in the future as well. But since everything is digital, it also makes this space prone to problems like hacking. The issue of 51% attack on a blockchain also floats around in the proof-of-work (PoW) cryptos. We even saw the big exchange Binance went through a hack just recently.
Events like exchange hacks and scams thus hurt the positive public sentiment regarding the world of cryptocurrencies. This leads to trust being lifted from the crypto world hence lowering the adoption in the general public and the investor community. Volatility, price manipulation, lack of regulation are some of the common factors halting bitcoin’s adoption worldwide while security remains to be a prime one. The fact is if there are chances of losing big money to a scam or to a hack or even to a private key loss, any investor would hesitate before investing.
For the future success of the crypto asset bitcoin, problems linked to price volatility, regulation and security remain to be the prime ones. For security, regulation plays a critical role as it will ensure investor security from the outside. So for bitcoin to succeed, it needs to be a 100 percent secure if it wants to rival the centuries-old monetary system established by banks, even if that means changing the consensus algorithm lying at its core.