Bitcoin Tracker: Challengers And Backlogs

It’s been a varied week for bitcoin.

First, some positive news: Bitcoin’s upward pricing trend continues, more or less. It opened this morning with a value of $742 and peaked at $744 (about as close as bitcoin has come to its year high since it hit $768 back in June). As of the time of writing, the price sits around $693, still up from last week’s $682.

Meanwhile, in China, Bitmain announced plans to open a new mining center, according to CryptoCoinsNews. The mine is set to open in December, boasting 45 rooms and a total size of 140,000 kilowatts. It’s unclear if the facility will augment Bitmain’s mining power or if it’s just a relocation of current operations.

Despite the new mine and a steady increase in value, this week didn’t offer much in the way of smooth sailing for bitcoin. Suspicions, backlogs and new competition threaten to throw some digital wrenches in continued growth.

Bitcoin’s reputation caused an upset in Vietnam this week. Note the use of the word “reputation.”

CryptoCoinsNews also reported that a digital currency pyramid scheme in Vietnam led the government to, once again, warn against its citizens using bitcoin. One economist described the scheme: “Real money is used to buy virtual currency, and as virtual currencies gain value, commissions and bonuses are received by users who call in other investors to participate.”

While this particular scheme capitalized on major interest surrounding digital currencies (it raked in $1.1 million before it was shut down), bitcoin weren’t involved in the slightest. The reputation of bitcoin precedes it. The perceived risks, varying stability and potential seediness of digital currencies make it easy to place blanket blame on a major player like bitcoin. It’s much tougher to legitimize and regulate it.

Vietnam officials have an antagonistic history with bitcoin. Vietnam’s State Bank has denounced bitcoin since 2014. The country’s Department of eCommerce and Information Technology warned against trading in bitcoin in March 2016. These new warnings are a clear continuation of that trend.

Elsewhere in the world, officials continue actively seeking legitimacy and regulation for bitcoin. Some find the process easier than others.

Switzerland’s new plans to loosen regulations on FinTech firms to boost competition include addressing the legal treatment of virtual currencies and assets. The plans will begin to take effect in early 2017, so we’ll see more of how this develops in the new year.

New York State finds itself in the midst of a serious backlog of applications for its BitLicenses since they were first issued back in 2015. The 500-page, $5,000 applications are an attempt to offer an unequivocal legal framework for businesses to exchange in bitcoin. But the process is pricey, the documents are massive and several original staff have left the project. Currently, 15 applications are pending.

The slowdown in application processing has allowed other states to catch up to New York — which, at one point, hoped to be at the vanguard of a bitcoin movement. Washington, D.C., has issued seven bitcoin licenses to date, and North Carolina has approved two so far. Still, slow regulation fares better for the safety, security and legality of future work with bitcoin than blanket bans.

Speaking of safety and security: Questions about the limits of bitcoin’s anonymity were raised this week by Bloomberg. It’s not big news that law enforcement can trace purchases back to the source. All bitcoin transactions by design are recorded in a permanent public ledger accessible to anyone. A single payment is enough to expose user identities and transaction histories. That’s far from covert (maybe bitcoin doesn’t really warrant a crypto- prefix after all).

While bitcoin’s lack of anonymity may not be a major issue for regulators, banks and proponents of its underlying blockchain tech, it could still put a dent in its overall use by businesses and consumers who want to keep transactions private. Especially since, as luck would have it, a new digital currency has appeared on the market — a currency that may actually be impossible to trace.

Zcash made a splash this week in the world of cryptocurrency. Transactions with Zcash can be confirmed by a network without recording the user’s address — rendering transactions untraceable. Unsurprisingly, Zcash is being touted as the next big thing. People have been paying $1,000 per unit, and it has already secured $3 million in backing.

Another addition to the virtual currency game, Vcash (not to be confused with Vassar College’s internal student debit system), ditches ledgers altogether. According to a press release, Vcash has another leg-up on bitcoin — its ZeroTime feature. This lets users complete transactions without the need for confirmation, cutting back on transaction time and increasing safety. Vcash’s developers have reported signs of healthy growth and development for the new currency in recent months.

It was especially clear this week that bitcoin’s value rise, familiarity, relative longevity and growing army of compatible ATMs are at odds with mounting regulatory hurdles and fresh competition. People are seriously eyeing alternatives to bitcoin for security and time-saving reasons. Some have even been so bold as to claim bitcoin is out. But only time will tell.