Top virtual currencies from Bitcoin to Ethereum have been struggling over the past months. In fact, while regulators move towards closing exchanges and even potentially banning trading in their respective territories, Bitcoin along with other cryptocurrencies have plummeted continuously.
Financial expert David Garrity has mentioned that in order for cryptocurrencies to survive, there should be mass adoption of its technology. He mentioned that “Are we starting to see these killer applications start to develop that lead to greater mass adoption relative to the blockchain protocols that are underlying and supporting these cryptocurrencies?”.
He also added that “To have a price move that is not really being matched by what’s going on in the real economy in terms of driving activity and goods and services says that something is more of a speculative nature than something that actually has fundamental underpinning”.
Though Bitcoin almost reached $20,0000 in mid-December, many financial experts have discouraged people to buy and trade cryptocurrencies because of its volatile nature. And for most experts, they see the digital currencies as a bubble that is ready to burst anytime.
South Korea and India
Earlier in January, South Korean regulators were making a move towards banning cryptocurrency trading in the country. There were many reasons behind their decision. From North Korea stealing investors’ cryptocurrencies to the number of people who could actually lose their money, these are just some of the factors that many experts believe why South Korea is making a move towards banning cryptocurrencies for good in their country.
And more recently, India has caused panic to many Bitcoin and other cryptocurrency investors in the country and all over the world. India’s leading private banks have suspended digital currency exchange accounts in order to curb digital currency trading. It was after Finance Minister Arun Jaitley publicly denounced digital currencies.
Bitcoin which opened $12,899.20 plunged by $1,000 just before 8 am GMT yesterday.
There are many cryptocurrency exchanges in India that are now being targeted by State Bank of India, Axis Bank, HDFC Bank, ICICI Bank and Yes Bank. These banks have limited activity on their accounts or have closed them for good. There are even some reports wherein banks are now scrutinizing the current accounts held by digital currency exchanges.
Around two weeks ago, Koinex, a digital currency exchange in Mumbai mentioned that Indian banks were bottlenecking transactions that forced Koinex to temporarily suspend all business transactions. They have mentioned on their blog “In the past few days, many of our users have faced difficulties with Indian Rupee withdrawals on Koinex”. They added that “A tussle between our payment service partner and their bank has caused an indefinite delay in the settlement of large portion of deposits to Koinex in the past two weeks”.
Though Bitcoin trading remains unregulated in India, this approach could actually make a huge impact that can discourage people from investing on the cryptocurrency. It isn’t just the lack of regulations that made Indian officials worry the most. They are also worried that there are Ponzi schemes that could be taking advantage of the popularity of cryptocurrencies.