A top official from South Korea said the government is preparing a bill to ban the trading of cryptocurrencies on exchanges, stepping up its efforts to curb speculation.
In 2008, Satoshi Nakamoto — the Keyser Soze of technology — wrote a nine-page white paper that became the founding document for the current cryptocurrency system.
In theory, Nakamoto argues, bitcoin represents a peer-to-peer payment system that can operate without third-party interference (e.g., government or financial institution). This concept, as a technology system, is revolutionary.
The problem with Nakamoto’s position, like that of many technology enthusiasts, is that, at least in the short term, governments have a vote.
Rather than a peer-to-peer payment system, South Korean Minister of Justice Park Sang-ki claimed cryptocurrencies are akin to speculation and gambling. The following graph shows why Mr. Park is probably right.
Earlier this month, China banned bitcoin exchanges and mining operations. The UK is rolling cryptocurrencies into terrorism and anti-money laundering regulations. The US Treasury Department is currently monitoring crypto and will likely follow the UK’s lead.
As the graph shows, bitcoin is right now a very volatile asset. I believe that wide-spread adoption — including from government — will happen, but not for years or decades.
In the meantime, there will be a few big winners and many big losers. So strap in. The roller coaster is just warming up.