How far will cryptocurrency become the mainstream asset?

Cryptographic currency has changed from an obscure fashion to a more mainstream form of investment and finance. A few cryptocurrencies dominate the market, and bitcoin accounts for 465,438+0% of the total market value of the industry. With this growth, governments all over the world are interested in regulating this industry. Some governments have also taken measures to establish their own digital currency.

Cryptographic currency growth

The total market value of cryptocurrency has increased from about1900 million dollars in 20 17 years to 2.2 trillion dollars in 2022. Cryptographic currency created billionaires almost overnight.

With the expansion of the influence of cryptocurrency, the federal government is more and more interested in cryptocurrency.

In March this year, President Biden issued an executive order, which set policy objectives for the development of digital assets and instructed institutions to report policy recommendations. These goals include protecting consumers, investors and enterprises and ensuring privacy; Maintain financial stability; And prevent illegal use of money laundering and ransomware.

The executive order instructs the Ministry of Finance to report the impact of the United States' development of the digital currency issued by the Federal Reserve, and dozens of countries in the world are exploring this currency. Eight Nigerian and Caribbean countries have launched their own central bank-digital currency. The order instructs the Attorney General to report whether there is a statutory power to create this currency, or whether Congress needs to pass laws to provide power.

On June+10, 5438, the Federal Reserve issued a report on the potential benefits and challenges of the official version of the United States, but it did not advocate or oppose this idea. The Federal Reserve said that it did not intend to issue digital currency, and "it would be better to issue it in the form of a specific authorization law without the explicit support of the executive branch and Congress".

Financial institutions engaged in traditional payment transactions must maintain large electronic networks, hire employees and charge anyone who uses their systems to transfer funds. Encrypted currency can significantly reduce costs and payment time. The Ukrainian government has collected more than $6,543.8 billion in cryptocurrency donations, which will be more difficult through traditional methods. However, the price of cryptocurrencies may fluctuate, which some people say is a factor preventing them from being widely used for payment.

Supporters also said that cryptocurrency can provide higher security and privacy in financial transactions. People have no personal identity in the books that record these digital transactions. When sending or receiving encrypted money, they have a private key. Blockchain technology can permanently record the transaction order, and ultimately these transactions are irreversible. Some people may prefer the relative anonymity of cryptocurrency to the enjoyment of personal information by traditional financial institutions.

Some people compare the current situation of cryptocurrency with the early state of the Internet, emphasizing that we haven't seen the full range of its application. They say it is crucial to make the industry innovate. Senator Pat Toomey, a senior member of the American Banking Committee, recently sought legislative proposals to clarify the rules and laws surrounding cryptocurrencies, so as to protect investors and promote industry innovation. He also released a draft legislative discussion, which will establish a new regulatory framework to stabilize the currency, that is, digital assets with one-to-one value with reference assets such as the US dollar. Senators Cynthia Lummis and Kirsten Gillibrand also plan to propose a regulatory framework for cryptocurrencies and other digital assets, including definition, tax treatment and clarification of the legal status of digital assets as securities or commodities.

The anonymity and dispersion of cryptocurrency also make it attractive to criminals. The notorious online market "Silk Road" uses bitcoin to promote the sale and transportation of illegal drugs. By the time it was shut down by the FBI in 20 13, there were more than 100000 illegal drug transactions on this website. The website facilitates other criminal activities, including hacking services and selling fake driver's licenses, passports and social security cards.

Cryptographic currency is indispensable to the alarming growth of ransomware attacks worldwide. According to reports, the average demand for ransomware in 20021year was 2.2 million dollars, an increase of 144% compared with 2020. According to the data of Chainalysis, "crimes based on cryptocurrency hit a record high in 20021year, and illegal addresses received1400 million dollars in one year, up from 7.8 billion dollars in 2020." However, Chainalysis also found that illegal transactions only account for 0. 15% of the total transaction volume of cryptocurrencies.

The FBI has successfully tracked down and even recovered the extortion payments made through bitcoin and other cryptocurrencies. In June last year, the Ministry of Justice announced that it had tracked and recovered 63.7 bitcoins, which were paid by colonial pipeline companies in response to ransomware attacks. At that time, the value of Bitcoin just exceeded $2.3 million. Contrary to popular belief, cryptocurrency transactions are not completely anonymous. Most of the general ledger records are public, and transactions are not as difficult to track as many people think. The difficulty is to match the money in the digital wallet with the real owner. For this reason, all American cryptocurrency exchanges must have procedures to identify customers.

In July, the Senate Judiciary Committee held a hearing on preventing and responding to cyber attacks. A witness from the Ministry of Justice testified about the efforts of the ransomware and digital extortion working group of the Ministry of Justice to "disrupt, investigate and prosecute ransomware attacks". On April 5th, the US Department of Justice announced the confiscation of Hydra Market, which is the largest and longest-running dark net market in the world. According to the department, "in 20021year, Hydra accounted for about 80% of all cryptocurrency transactions related to the dark net market, and since 20 15, the market has obtained about $5.2 billion in cryptocurrency."

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Generally speaking, there seems to be no reason why we must encrypt money, but the scope of encryption is expanding. Every day something new is born, and rotten old guys are dying. But there is no voice that innovation is guilty!