Over the last few years cryptocurrencies have gone from being the domain of computer geeks and nerds to being something that everyone has heard of – even if they’re only aware of bitcoin in some vague ‘it was worth a lot of money recently’ way. Bitcoin – the most well known of the cryptocurrencies – didn’t just appear out of nowhere one day, though. It was first discussed 10 years ago, when a mysterious figure called ‘Satoshi Nakamoto’ published a paper on the idea of a peer to peer currency. In 2009, Nakamoto made the very first bitcoin transaction, sending a computer programmer 10 BTC.
In the early days, there were just a small number of dedicated users. Therefore, when bitcoin was hacked in August 2010 it wasn’t much of a crisis. The vulnerability that allowed the rogue transaction to take place was fixed, and things continued as normal. Bitcoin was assigned a monetary value for the first time, and a user swapped 10,000 bitcoin for two pizzas – meaning that even at late 2018 prices those pizzas were worth millions.
In 2011, other rival currencies appeared. Digital currency like Litecoin, Swiftcoin and Namecoin were some of the bigger ones to crop up. Bitcoin attracted some mainstream media attention in the UK at that point, because it was being used to support anonymous transactions on the dark web. That attention sparked a shortlived wave of interest in cryptocurrencies, and made the price of Bitcoin soar, briefly, before it crashed back to its former value.
It was still some time before Bitcoin would start to become a part of the public consciousness in the United Kingdom. By 2012 it was starting to get mentioned in popular culture in the United States, but it was still relatively niche in the UK. Microsoft started allowing people to purchase games with the virtual currency in 2014, and exchanges started to crop up in Europe, but it was still hard for people who were not tech savvy to acquire the currency.
That didn’t really start to change until late 2016, early 2017, when other currencies such as Ethereum started to appear, and a small (but growing) number of businesses started to accept cryptocurrencies. Today, it is possible to subscribe to some niche video games using major cryptocurrencies, and for a while the popular video game platform Steam allowed people to purchase video games using Bitcoin (although they did not accept other ‘altcoins’). The value of Bitcoin rose from $900 to $20,000 during 2017, but crashed dramatically after that, and as of late 2018 it is now sitting at $6,300 in USD.
The challenge that the UK, and indeed most other countries, face is that it is hard to know whether to enthusiastically embrace bitcoin, or whether to regulate it. The Financial Conduct Authority regulates all activities relating to money in the UK, and their stance is that crypto-assets that are designed as a means of payment or exchange are not within their scope. The SEC and the CFTC, which regulate markets in the United States, take a different view. In the UK cryptocurrency is not yet strictly regulated. This means that they present a lot of opportunities for people who want to get involved with trading, buy new coins when Initial Coin Offerings appear, or even start their own currencies.
The authorities in the UK are taking a rather conservative approach to blockchain at the moment. They are trying a sandboxing program, accepting 29 companies (11 of which relate to blockchain) into a regulatory sandbox that would allow them to test their ideas and solutions in the UK market, under a controlled environment. The Treasury says that they intend to put some form of regulation in place for cryptocurrency traders, requiring them to follow KYC regulations and to report any suspicious activities. The HMRC ruled that income from mining cryptocurrencies is not subject to VAT, but that gains maid from holding or selling cryptocurrencies would be treated in the same way as gains from other types of currency or commodity – unless the currencies were held/acquired for personal reasons instead of speculative reasons.
Banks in the UK are not as enthusiastic as the government, and are refusing to support virtual currency related business. This is holding back the growth of the blockchain industry in the UK. The industry is still young, however, and there is still a lot of opportunity for further growth. If the banks get on board with cryptocurrencies, then the UK could lead the way in terms of the industry in Europe. We are likely to see some huge changes as blockchain matures, and it may not be the thing that ‘changes money as we know it’, but it is here to stay in one form or another.
Be sure to check out our latest altcoin posts here at www.topcoincryptocurrency.com