Does Bitcoin Need New Rules

Jievani Weerasinghe on Unsplash/Creative Commons
Photo by Jievani Weerasinghe on Unsplash

Bitcoin is increasingly becoming the preferred means of payment for some people. However, the dramatic volatility of this cryptocurrency has prompted some people to wonder whether this virtual currency needs new rules. Essentially, some individuals question the current regulatory system’s ability to protect consumers and maintain market integrity while promoting innovation.

Currently, some people are trading or buying this virtual currency on platforms like Also called crypto exchanges, these platforms allow people to purchase Bitcoin using fiat money. After that, users can send Bitcoins to their digital wallets or trade them on the websites.

While Bitcoin has drawn many people’s attention, some people believe that it’s yet to measure up to the anticipated benefits. For instance, some individuals feel that Bitcoin is not serving as a unique, quick, and efficient payment system. It’s also not functioning as a value storage.

At the same time, some people believe that this virtual currency has sizeable risks. Some individuals also associate Bitcoin’s use and creation with power concentration among few owners and operators, market opacity, high energy consumption, price volatility, illegal and illicit transactions.

The unrealized rewards and risks prompt some people to argue that Bitcoin needs new rules. Currently, Bitcoin has partial or non-existent regulations. Some countries, like China, have even banned Bitcoin. Nevertheless, the current discussion should focus on consumer protection, financial instability, the intersection of the conventional financial system and Bitcoin, and public security.

Why Governments Want to Issue New Rules Governing Bitcoin

Many regulators have stood aside for many years as Bitcoin grows in popularity. The adoption of this virtual currency has increased rapidly, especially among people that want to embrace innovation. But the unrealized rewards and risks that some people associate with Bitcoin have prompted some governments to think about new rules governing Bitcoin and other virtual currencies. Essentially, regulators need a regulatory framework to address the potential risks Bitcoin poses to financial markets and consumers.

People ostensibly peg cryptocurrencies’ value to the U.S dollar, gold, or a stable asset. The notion is to ensure that cryptocurrency holders can transact with virtual currencies or earn interest on their holdings. And Bitcoin use has surged rapidly over the years, raising concerns among regulators. Ideally, governments want to establish a regulatory framework to protect their consumers and markets.

Also called speculation vehicles, cryptocurrencies are transforming finance and banking. They are also stirring discussions on whether the world needs new rules to regulate them. Some governments are even developing their digital currencies.

Updating the Rules

Considering the balance between Bitcoin’s costs, risks, and benefits, it’s crucial to update and revamp the current regulatory framework for governing them. For instance, governments should review the distinction between the Bitcoin network’s activities and interfaces with the traditional financial system.

These interfaces could include Bitcoin’s conversion into fiat money and trading Bitcoin tokens and related tokens as derivatives and securities. Considering the increasing Bitcoin’s popularity, this might be critical. Bitcoin owners and miners create opportunities that some people can use to manipulate the market and hurt the public. Such developments make it difficult for people to differentiate between Bitcoin tokens and assets.

Additionally, Bitcoin needs new rules to heighten investor protection and transparency. If ICO or initial coin offering requires registration, even mining Bitcoin in substantial volumes should be registered. That’s because this activity affects the market’s demand and supply conditions and the market’s value transfer network’s integrity. Rules governing such aspects would allow potential and current Bitcoin network members to know what they are getting into when starting.

Final Thoughts

Satoshi Nakamoto established protocols that govern Bitcoin’s creation and use. However, the world is changing, and how people use this virtual currency varies. Consequently, some people feel that Bitcoin needs new rules to govern its ownership and use. Nevertheless, many people think that new regulations should improve Bitcoin and its operations and not restrict it.

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