Bright Future of the Bitcoin

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During the past few weeks nothing really new occurred in cryptocurrency’s world. The last two weeks, however, have already brought a change. The discussion related to Mike Hearns’s exit about the future of Bitcoin lead by important developers from the community is contributing to this change. Moreover, recent statements on the usability of cryptocurrencies are instrumental in determining the future of the currency market.

It seems that a better future awaits the Bitcoin. For a long time main developers of the Bitcoin could not decide how to go on. Fortunately, they selected a favorable one of two possible solutions. First idea was that Bitcoin will be a reserve currency. Second idea, was that Bitcoin will be used as a currency for exchange. But in the latter case the Bitcoin would have to undergo some changes. Its developers have to first make the block bigger so it could process more transactions, which miners confirm by mining. The reason for this is simple. With current capacity of block, the Bitcoin will not be able to confirm all transactions. In conclusion, developers decided that they opt for the second idea. In April they will release an upgrade which users can download from internet. In the same way, in July of 2017 a second upgrade is going to be released. The upgrade is going to be obligatory for all users. Whether this will be successful, remains to be seen. Nevertheless, Mike Hearn would definitely be in favor of this solution as he preferred increasing capacity of the block.

Furthermore, a mixed message came from China. Governor of Central bank, Zhou Xiaochuan, had a positive speech about cryptocurrencies. Probably he does not understand what cryptocurrency is. Chinese central bank would like to implement cryptocurrency in the country, but there is a problem. They would like to implement centralized currency and not decentralized money like a Bitcoin. They want to have only controlled and cheaper money with anti-money laundering protection. In this way it will not be a cryptocurrency as we know it but only fiat currency without physical form.

Similar message came from Russia. Earlier, the advisor of Vladimir Putin said that cryptocurrencies are a real threat to fiat currency and they should be banned. In these days we can read about speech of the deputy governor of central bank, Olga Skorobogatova, who claimed that banks should expect some impact of the Bitcoin and the Blockchain (distributed ledger) in the next two years. Similarly to the previous message, there are also some questions. We can only guess whether this system could exist without serious token.

On other hand, we have better news from Ukraine and Australia. Some important members of the government in Ukraine signed a statement about collaboration among start-ups from the cryptocurrency area. They are going to use the Ethereum which is a rival of Bitcoin. The Ethereum is backed by the Blockchain, which is different from the Blockchain of Bitcoin. Main difference is that the Ethereum can process transactions faster. Government would like to use this solution in the election and referendum because the whole system would be more transparent.

In Australia politicians have a similar idea. The Flux party is willing to implement a system based on the Blockchain of Bitcoin. If they have members in parliament, they will vote through this system in collaboration with people. Simply put, people would influence party members in parliament through the voting system. One big question is, whether party members will follow the suggestions.

In conclusion, a positive wind blows from Japan in the direction of cryptocurrencies. Agency of Financial Services is willing to change current legislation and give the “virtual currency” status to all cryptocurrencies. This step would stop money laundering in the country, because organizations which operate with cryptocurrencies have to register in agency. This, in turn, would prevent possible negative situations (like the fall of exchange Mt.Gox) from occurring. New legislation should be implemented in the first half of 2016.

Martin Lindak
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