TECH TALK: Regulation is urgently needed to stabilise and secure the volatile crypto market, says BILL MAGEE
Have we just seen a cryptocurrency meltdown or just another blip in a highly-volatile global coin market in urgent need of a regulatory reboot? Over $500 billion (£400bn) of crypto value was wiped out in less than a fortnight resembling the dot-com boom of 20 years ago. And we all know what happened then.
At the turn of the century the tech stock market bubble well and truly burst. Nasdaq crashed. Companies without a business model, yet having multi-million valuations, went to the wall and once-eager investors were declared bankrupt.
What cryptocoin and dot-com have in common is a dramatic emergence and impact on stock markets.The difference is that the former is, as yet, unregulated, making it harder to predict. The pattern certainly compares with the frenzy and fate of those dot-coms. Back then it was Internet stocks trading through the roof (this time read digital currencies) and money flowing like water (this time electronically).
Bitcoin was created around 2009, as a response to the global financial crash the previous year. It remains, by far, the market leader and only recently it was consolidating at $50,000 (£40,000) after hitting an all-time high last November of $68,000 (£55,000).
Coin Metrics reports it has experienced a 40% drop in the last six months, to around $27,000 (£22,000) after the surge in interest rates in the US, the principal digital coin market. Crypto markets were viewed as a risky asset and unceremoniously dumped. The collapse by a colossal 97% of the Terra Luna stablecoin raises the prospect, according to euronews.next, of a 2008-like financial crash.
Such volatility doesn’t inspire confidence in the security of digital wallets and in response IT company Capito staged a webinar with Barracuda Networks, entitled “How Can You Protect Something You Cannot Touch?”
Barracuda has intercepted multiple cyber attacks. Lately there has been a surge in hackers incorporating cryptocurrency into business email extortion and ransomware, impersonating digital wallets and related apps. Concerned companies should look at implementing an intrusion prevention system (IPS). This automated security device monitors and responds to potential threats, identifying suspicious activity, logging relevant data, attempting to block such activity and finally report it.
Coindesk research director Nolan Bauerle believes nine-out-of-ten digital coins “will not survive a crash in the markets”. Those that do will “dominate the game” boosting returns for early investors. There is an expectation that the price will bottom out at $29,000 (£23,600).
Into this market, Scotland’s sole cryptocurrency, Scotcoin Project Community Interest Company recently announced a partnership with ProBit. Chief executive Temple Melville describes it as “one of the most exciting financial developments we have seen in Scotland for some time” and is hiring a full-time CEO and board. Scotcoin should be available to buy-and-sell on the open market later this year.
Hopes are of a smaller and more refined online currency marketplace, regulated to resolve the myriad of tech, legal and institutional issues. And one that is significantly less volatile.
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