Bitcoin is around 10 years old, but the future of the cryptocurrency remains uncertain according to a recent Forbes article. According to Forbes, a new report indicates that the financial system that created Bitcoin could end up making the cryptocurrency obsolete.
Investors need to be aware of the potential risks of purchasing Bitcoin, including legal risks, financial risks, and regulatory risks. One of the risks is that changes in the financial system will eliminate the need for a cryptocurrency.
Will Bitcoin be Killed by the Banks That Created It?
According to Forbes, Bitcoin was created in response to the financial crisis and a lack of effective response to that crisis by political leaders and by the financial system. The consequences of the financial crisis linger to this day, which is partly why Bitcoin and other cryptocurrencies remain so popular.
Bitcoin is, essentially, a populist currency and is a form of financial populism. It is valuable as a response to a broken system, and if the system is able to be fixed and becomes trusted again, Bitcoin and the blockchain would no longer be deemed as necessary and would lose much of its value.
Big financial institutions are responding quickly and efficiently to deal with Bitcoin now, and those banks whose actions led to the creation of Bitcoin by causing the financial crisis could end up helping to put an end to Bitcoin. One example is XRP, or Ripple, which has been embraced by banks that want to find ways to use digital coins faster and with more transparency to help restore confidence in the system.
As traditional banks adopt some of the features – such as transparency – that helped to draw people to Bitcoin, banks can work within the existing financial system more easily than outside cryptocurrencies and tech companies because banks understand the myriad regulations that exist within the financial services industry. They can essentially co-opt the populist desire for an alternative currency in response to the financial crisis and – in doing so – they can eliminate the need for Bitcoin and render the currency virtually obsolete.
While the author of the report suggesting Bitcoin may become obsolete does indicate that Bitcoin won’t just disappear, he believes that when traditional banks adopt its best features, cryptocurrencies will become less appealing to many people and it will not play a major role in financial or investment markets.
It remains to be seen what will happen to Bitcoin in the future, and no one can reliably predict what will happen to the cryptocurrency. If you’re thinking about investing in cryptocurrencies, it’s important that you are fully informed of the law and that you make smart choices to invest responsibly to protect your coins.
A Bitcoin attorney will provide the personalized help and support you need to better understand the regulations surrounding the Bitcoin market so you can invest in the safest possible way. Contact an attorney today to learn more.