Bitcoin and Cryptocurrency: what to expect in 2023

Cryptocurrency has advanced significantly over the past ten or more years. In 2010, Bitcoin, now the most popular Cryptocurrency, was only starting.

Creating an asset that could be traded without traceability first emerged in 1983, giving rise to digital assets like cryptocurrencies. Additionally, the absence of centralized organizations was a critical factor in the development of cryptocurrencies.

Satoshi Nakamoto wrote a white paper on Bitcoin in late 2008. The white paper described how the blockchain network would operate with Bitcoin. Nakamoto wrote the Bitcoin white paper and acquired the domain name bitcoin.org.

Nakamoto produced the first block of Bitcoin at the beginning of 2009. The Genesis Block is the very first Bitcoin block. It had no value when Genesis Block was made and no worth throughout the first few months of its life. However, the Cryptocurrency did have value after it began to be exchanged openly in April 2010 and traded for just under 14 cents. After being available for trading for seven months, Bitcoin traded for 29 cents.

Banks are not required to verify transactions in Cryptocurrency. Cryptocurrency is a peer-to-peer system enabling anyone to send and receive payments everywhere. The idea behind cryptocurrencies like Bitcoin is to allow people to stop carrying cash around and start making payments using digital assets.

Because it uses encryption to confirm transactions, Bitcoin has an eponym. Encryption is designed to provide security and safety for all transactions.

Blockchain is a type of open ledger that is used by cryptocurrencies. All Bitcoin transactions are recorded on the blockchain, updating them in real-time. The database of transactions between two parties that make up a blockchain may be seen as such. The data blocks are recorded chronologically and contain information about the transactions.

With New global trading activity and technology helping benefit individual traders, you now have apps for Bitcoin/cryptocurrency and forex app on your smart device.

Is Cryptocurrency and Bitcoin Regulated in the United States?

Cryptocurrency regulation varies from nation to nation around the world. The Biden Administration and the United States began implementing a new regulatory framework for the US and cryptocurrencies in 2022. Due to the new directive, the Securities and Exchange Commission and the Futures Trading Commission will have more robust control over those businesses that provide bitcoin trading.

In the United States, the laws governing cryptocurrencies are lax at the federal level.

The US passed legislation concerning cryptocurrencies in 2001. Provisions about cryptocurrencies were established as part of the Infrastructure Investment and Jobs Act to hold exchanges responsible for tax reporting.

According to the new regulation, any organization or person that trades digital assets on behalf of another is regarded as a broker. Every customer must get a 1099-B form, which must also be sent to the Internal Revenue Service.

The President's Economic Report had a section on digital assets on March 20, 2023. This part was added for the first time in the report's history. The study revealed how current cryptocurrency assets still need to provide overall advantages, such as enhancing payment systems.

The research also describes how cryptocurrencies, like the US currency, have fallen short of fulfilling the purposes of money. The study also states that cryptocurrencies lack support for exchange and are highly volatile.

Countries outside the United States have their forms of regulation regarding cryptocurrencies.

The European Union (EU) recognizes Bitcoin and other cryptocurrencies and recognizes them as crypto assets. Bitcoin is readily used within the EU, and the currency has no illegal aspects. However, the European Banking Authority, which regulates currency within the union, has stated that cryptocurrency assets are outside of its regulation and consistently warns businesses and individuals of the risks associated with using Cryptocurrency for payment.

In 2020, a proposal was finalized by the European Commission for legislation which was created to regulate cryptocurrency assets. Over the last few years, the legislation has been amended, and in October of 2022, the final edition was submitted to the EC for a vote. In April of 2023, the European Parliament passed what is known as the Markets in Cryptoassets Regulation (MiCA). The function of MiCA is to regulate services that are related to cryptoassets and will be enacted at the beginning of 2025.

Canada has a relatively friendly stance regarding the transactions associated with cryptocurrencies. The Canada Revenue Agency (CRA) requires transactions related to Cryptocurrency to be reported as business income. In addition, Canada considers cryptocurrency exchanges to represent money service businesses. All cryptocurrency exchanges in Canada must register with the Financial Transactions and Reports Analysis Centre of Canada.

France also regulates cryptocurrencies and has implemented specific regulations by the Monetary and Financial Code (MFC). Other countries that monitor the use of and regulate cryptocurrencies are Australia, the United Kingdom, Denmark, Spain, Germany, Switzerland, and Japan.

Which countries have implicit or absolute bans on cryptocurrencies?

There are several countries throughout the world which either have either an implicit or absolute ban on Cryptocurrency. Countries with implicit bans on cryptocurrencies are Zimbabwe, Cameroon, Libya, Central African Republic, Lesotho, Gabon, and Guyana. In addition, there are several countries with outright bans on cryptocurrencies. Those countries consist of China, Qatar, and Saudi Arabia.

Why do countries ban cryptocurrencies?

While most countries allow for the use of Cryptocurrency, several do not. The leading reason provided by those countries that don't allow Cryptocurrency is volatility.

The use of cryptocurrencies is widespread and utilized throughout the world. Users of cryptocurrencies in the personal and business space like using cryptocurrencies because of the lack of regulation. For many governments, this lack of regulation creates numerous issues. The leading problem associated with the lack of regulation with cryptocurrencies for government entities is calculating the tax liabilities of crypto assets.

Another reason governments are suspicious of Cryptocurrency is its usefulness in money laundering and purchasing drugs online.

The use of Cryptocurrency has also been scrutinized by governments and its role in climate change. The blockchain system, which is the primary form of digital record-keeping, uses a tremendous amount of computer power. An example of how much energy a blockchain uses is the Bitcoins blockchain. Bitcoins blockchain on its own uses 204,5 TWh of electricity each year. This is the equivalent of the power consumed in a single year by a country such as Thailand.

During 2023, prices of Bitcoin have fared well. Bitcoin started the year at roughly 16,500 USD, trading at 27,137 USD. The asset has increased by more than 38%. However, Bitcoin traded at roughly 64,000 USD in November of 2021. So, it would be hard to argue that regulating cryptocurrencies overall has increased their value due to regulations globally. Suppose the idea is to provide a regulatory framework so that individual investors and businesses are comfortable trading the asset and using it for commerce. In that case, regulation of cryptocurrencies is a positive practice. Global regulation of Bitcoin and other crypto assets has increased globally over the last few years. It will take time to determine how new regulations globally will affect the overall price of Bitcoin and its peer cryptocurrencies.

The Bottom Line

The rise of Cryptocurrencies and their use has increased significantly over the last ten years. The peer-to-peer system of using Cryptocurrency allows individuals and businesses to send and receive payments worldwide. Cryptocurrencies create an environment where individuals don't have to walk around carrying cash and leverage a digital assets.

An open ledger records the transactions of Bitcoin and other cryptocurrencies. The ledger used by cryptocurrencies is known as a blockchain. The recordings of transactions are done chronologically, and as time progresses, the blocks of the transactions continue to grow.

In the United States, Bitcoin, along with other cryptocurrencies, is regulated. In 2022, the Biden Administration created a new regulatory framework for the United States and cryptocurrencies. Because of these new regulations, the SEC and Futures Trading Commission will have more robust control when monitoring businesses that provide bitcoin trading.

Outside of the United States, numerous countries regulate cryptocurrencies such as Bitcoin, while other countries outright ban the use of the currency. Within the EU, cryptocurrencies are recognized as crypto assets. There are no bans on the coin within the EU; however, governing entities such as the Europen Banking Authority, which regulates currency within the union, have indicated that the body does not regulate cryptocurrency assets and warns individuals and businesses of the risks involved.

In addition, Cryptocurrencies are accepted and regulated by countries such as Canada, France, Australia, Denmark, Spain, Germany, Switzerland, Japan and the United Kingdom.

Some countries outright ban the use of Bitcoin and cryptocurrencies. These countries consist of China, Qatar, and Saudi Arabia.

There is no direct link between the regulation of Bitcoin and cryptocurrencies and the asset's price. While there has been a bounce in 2023 in the asset, it is difficult to determine if any forms of regulation are correlated to this price increase.