Australia Moves to Regulate Bitcoin and Other Cryptocurrencies

Ever heard the Bitcoin hype? Well, you should’ve had. With prices skyrocketing to $20,000 per piece down to $6,000, any investor would’ve seen the potential both for a long or short trade.

 

But then, one can’t help think of its legitimacy. How can something from thin air work as a currency? Heck, how can it cost so much?

 

The Innovation Behind Blockchain

 

If you don’t know what exactly Bitcoin is, you are not alone. Here is everything you’ve wanted to know about Bitcoin (but were too shy to ask).

 

The innovation behind this digital currency is not Bitcoin itself, but the “blockchain”. In a gist, Bitcoin is the very first cryptocurrency where the blockchain technology is incorporated.

 

The blockchain is a digital ledger that records all transactions permanently in the peer-to-peer network. In other words, every computer that stores a Bitcoin or a cryptocurrency with blockchain has the transaction trail for all the Bitcoin transfers in the world.

 

Each transaction becomes a “block” and combines with the other “blocks” to form this perpetual blockchain. Yes, once the block is connected, it can never be altered. It is permanent.

 

These mechanisms allow transparency and accurate tracking of past transactions made for every single Bitcoin. This makes the need for a governing body (such as a central bank) inessential to track which one is fake or not.

 

Anonymity and Scandals

 
Anonymity and Scandals

Image Credit: Getty Images

 

Undoubtedly, the checks and balances the blockchain provide make Bitcoin a secure a finite currency. But then, the mechanism on how you trade Bitcoin and other Cryptocurrencies may pose a problem.

 

Usually, trading and using digital currencies are facilitated in “wallets”. Hackers can steal your Bitcoin if the platform providing the service is not secure. Such is the case with the 2014 Mt. Gox Scandal and the latest NEM coin heist this 2017. Roughly $400 Million were stolen each in these hacker burglary scandals alone. And with the nature of Bitcoin, the recovery rate is really low.

 

Also, although blockchain can track each transaction, the traders themselves are anonymous. The anonymity attracted money launderers to use cryptocurrencies to wash their blood money. Such as this alleged Russian Money launderer with $4 Billion in question.

 

With such problems, do we stop dealing with Bitcoin all together?

 

Registration and Regulation

  Registration and Regulation  

Innovation should be accepted and not deterred by the Government. Why scrap a technology when proper regulation is what’s needed?

 

And with Bitcoin’s quite disruptive change, Australia is doing just that. The Land Down Under moves to accept and finally regulate Bitcoin and other Cryptocurrencies. Australia enacted legislation to mandatorily register all operators and keep records of their users.

 

The Australian Transaction and Analysis Centre (AUSTRAC) will have the power to monitor all cryptocurrency transactions. The operators are required to disclose the details of the investors and a periodic reporting of transactions made during a specified period.

 

Those who are not registered or who do not comply are faced with hefty charges from the government. By having transaction trails and customer data, this strengthens the cryptocurrency against money laundering.

 

Conclusion

 

Need I say more? Cryptocurrencies are here to stay. We will face a high-tech exchange of goods in the future. With proper tweaks and regulation, we can be somewhat assured of its readiness for everyone’s use.

 

So, is it a farewell for your dollar bills? I doubt. For the meantime, I’ll just wait and see.

Leandro Eclipse

Leandro Eclipse is an entrepreneur who loves to travel. He believes in building multiple Location-Independent Sources of Income. Because if you are going to work anyway, might as well do it while exploring the world. Self-proclaimed foodie and tech geek. Follow him on IG @mikoeclipse.

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