Cyber Law 2: Follow cryptocurrencies, not money
At present, virtual and cryptocurrencies are quickly swooping into the markets to replace “traditional money.” In late October, upon the announcement of Chicago Mercantile Exchange regarding the building of a Bitcoin exchange platform, Bitcoin’s value rose by more than $7.000. (See www. coinmarketcap.com for further information and updated values.)
The question as to why the value of cryptocurrencies has been moving at such speed since their very foundation, namely Bitcoin, has puzzled many. In brief, most basic reasons are fees, bureaucratic intermediary institutions and security issues, but is that really all?
In the case of disintermediation of the traditional model, transactions will be conducted free of charge within a matter of minutes. It is also believed there are numerous security advantages that, from its decentralized state, governments are unable to easily seize on. Moreover, there are many ways to make the transactions anonymous and the account uncrackable for a Bitcoin account holder. In addition, the account information required to perform the transaction is not fully disclosed to anyone else, thus preventing fraud.
Blockchain on cryptocurrencies are decentralized ledgers that contain all crypto transactions and are verified by computers called miners, sort of a group of public ledgers who are rewarded in Bitcoins in exchange for their services. In brief, block or technically “node” stands for a processed crypto code,
while the chain stands for the digital network. For newcomers, all these miners may sound like the plot of a sci-fi movie but they are not. Yet, we do advise people to at least watch the groundbreaking TV series ‘‘Mr Robot’’ if it suits your interests.
It has become crystal clear that regulated financial bodies will be affected by this disruptive revolutionary technology if they don’t take the necessary steps to make this technology available within their provided services or somehow regulate its flow. As expected, the significant rise of Bitcoin and other alternatives, has ignited the global financial giants and encouraged them not to ignore the potential gains of cryptocurrencies. Financial establishments are now aiming to create new types of cryptocurrencies that will provide security and scalability, which may also preserve their upper hand against the Brave New Crypto World.
There are several potential risks surrounding cryptocurrencies that are largely wide-
ly known. These include money laundering, terrorist financing, unpredictability, excessive volatility and the presumptive loss of established financial players. Unlike the fiat currencies, there are (as yet) no guarantees that such currencies can be exchanged for real value in the near future since theır power derives from a decentralized public ledger technology. Still, in the case of the rise of cryptocurrencies, the supervisory charge in the global financial market of central banks will be adversely affected.
Apart from the above risks, cryptocurrency may give rise to various other legal risks in terms of peer-to-peer transactions. A new group of troubles, some of which are cyber security issues, and chargebacks for wrong payments may arise. To overcome the risks that may arise from a lack of explicit legal solutions, users may and usually use digital wallets offering to buy numerous types of cryptocurrencies.
The end of money?
Although it is not possible to foresee even short-term developments in financial markets, it is undisputed that laws and legal practice always adapt to the evolving world. How such adaptation comes to light will be revealed rather soon in our opinion and governments and authorities will definitely regulate the cryptocurrency market in one way or another and Turkey also will most probably take the EU system as a model similar to the cyber security strategy adapted in 2016.
In terms of money laundering, cyber security should be taken into a serious consideration by international regulatory bodies while establishing an organization to supervene the cryptocurrency market.
Furthermore, banks should at least implement new consumer and trade friendly approaches adapted to Blockchain technology or cryptocurrency flow to avoid potential global legal struggles of the famous grey market.
Besides these, Bitcoin wallets and other cryptocurrency intermediary service providers could be licensed under what authorities would require at a minimum requirement level to avoid the outcome of strict regulations, which would lead to a sharp increase in the grey market.
Cryptocurrency followers are waiting for regulations and approaches to reach fruition in order to foresee future developments. Not a single day goes by without noticing news regarding new approaches and regulations on cryptocurrencies and thus anyone seeking to keep up with the already-arrived future should closely follow current such developments.