Bitcoin crashes; Is the world ready for cryptocurrency?

Bitcoin prices fell below $6000, as prominent bankers cracked down and made one wonder if the bubble has burst? Bank for International Settlements, Agustín Carstens labels cryptocurrency as a ‘Ponzi scheme’ and a threat to the financial stability of the market. He added that drastic measures must be taken before it infiltrates the financial system.

Wild swings in values

The prices of the cryptocurrency have been gyrating like a hula hoop dancer and fell by 14% to $4,250 and then recovered to settle at $7,265 – up nearly 6% on the previous day. With a global clampdown, many banks are banning the trade of Bitcoins with their plastic.

The currency of the future?

However, there are some supporters of the new age currency or there are people who would like to remain in a shroud of ambiguity until the dust settles down and then take a stand.

Appearing before the Senate Banking Committee, Commodity Futures Trading Commission chair J. Christopher Giancarlo talked about the issue of price volatility or to be more precise, the wild swing of prices which defies any logic or predictability.

Christopher compared the volatility to the volatility in asset classes. However, he does not see it worrying and said that it was less than seen in other assets though he was not able to explain what really drives the volatility in these currencies.

Cryptocurrencies are not related to established currencies like the Dollar or the Pound whose volatility and rise or fall are predictable or at least explainable. However, Bitcoin volatility is something which is beyond comprehension. If we look closely Giancarlo’s comments can be termed as positive.

We could approach cryptocurrencies much the way we approached the internet in the earlier days. Every action must be done with the underlying principle of causing no harm to the internet. The same principle must be applied here.

Better surveillance could reduce the risks

However, considering its volatility crypto money will require a Comprehensive and attentive regulation especially in a way to attract retail investors to this space. Authorities must educate and take measures to protect the rights of the investors.

However, there is no dearth of skeptics like the former governor of Mexico’s central bank who said that cryptocurrency is actually pretenders of currency and hence unsafe and will provide new routes of tax evasion, money laundering, and other nefarious activities.