According to The New York Times, the price of Bitcoin has hit record highs in recent months, more than doubling in price since the start of the year. In fact, the cost-estimating website places the current value of all the Bitcoin in the world at $41 billion. Even though this is more money than most Americans will ever see in their lifetime, experts say Bitcoin still has a long way to go before it becomes remotely relevant.
The Need for Regulation
As Bitcoin continues to increase in popularity, the need for regulations has also grown. More attention has been drawn to this fact as some of the world’s largest wealth managers have begun to give consumers the opportunity to invest in Bitcoin. Boston-based Fidelity and UK-based Hargreaves Lansdown just recently facilitated investor access to this digital asset.
According to The Business Insider, “Hargreaves Lansdown now gives clients the option to invest in an exchange traded note (ETN) that tracks the price of bitcoin…as more well-known wealth firms give their clients access to bitcoin investment, interest in the asset by mainstream investors will undoubtedly rise.”
The problem is that, as these firms increase access, the firms are also increasing the level of risk consumers are exposed to. As far as regulation, Bitcoin is still floating in a gray zone. In the majority of jurisdictions, Bitcoin is not legally recognized as a security or a tangible asset; thus, it does not fall under any regulator’s mandate.
In the words of The Business Insider, “This ambiguity, compounded by bitcoin’s relative novelty, arguably means that bitcoin investments are a special case and should be treated as such by existing financial regulators.”
BI Intelligence Report
Blockchain technology facilitates secure online transactions. The blockchain is a decentralized and distributed digital lender that records transactions across computers. Essentially, this technology ensures records cannot be altered. Nearly every global bank is currently experimenting with blockchain technology as a solution to regulation issues. This technology promises to deliver cost savings and operational efficiencies.
Sarah Kocianski, senior research analyst for BI Intelligence, Business Insider’s premium research service, recently compiled a detailed report on blockchain in banking. This report outlines the details of why banks are considering blockchain technology. The following list are some of the key points from this report:
- In addition to streamlining processes and cutting costs, banks are also hoping to leverage additional advantages, including: increased competitiveness with fintech’s and the ability to use the technology to create new business models.
- Regulators and banks are working together to develop regulatory frameworks.
- Blockchain-based solutions are expected to continue to emerge in different areas of financial services.
In the meantime, what does this mean for the business accepting Bitcoin as a method of payment? After all, Bitcoin is currently considered “high-risk” due to lack of regulation. There’s an estimated 80,000 businesses in the U.S. that accept Bitcoin – and that number continues to grow. These businesses have turned to high risk providers like eMerchantBroker, which offers a Bitcoin Merchant Account to address this industries’ specific needs. While Bitcoin has a long way to go, that doesn’t have to stop businesses from successfully adding it to their methods of payment.