Why Isn't Cryptocurrency Mainstream Yet?

News

24 May 2018

MRC Blog

Issue 25: Why Isn't Cryptocurrency Mainstream Yet?


There is a lot of talk centered around cryptocurrency and how it is an open field for the black market. Although there have been some fluctuations in pricing, and there have been some thefts, cryptocurrency is still a hot commodity for investors looking for the "next big thing."

The financial sector considers cryptocurrency to be one of their biggest threats -- hackers are continuously going around systems, sneaking cryptocurrency transaction processing software on numerous devices and networks that raises questions as to the security protocols in place on these systems and networks.


Do they really work?
Many people view this as a benign problem with minor occurrences. According to Jason Bloomberg, this is not the case. He thinks infestations will continue to rise, and illicit cryptomining will take over networks, data centers and other systems that are crucial to how corporate and personal business operates.


Raising the bar
Is there a way to prevent the demise of the current global infrastructure? According to Bloomberg, the only way is to make all cryptocurrency illegal. Here are two reasons why:

1. Open blockchains -- Anyone can create a blockchain without permissions, which leave systems open to vulnerability. Even with a permissioned blockchain, the rules are often flawed. These permissioned blockchains cost too much but do not have the same flaws as the ones without permissions do.

2. Illicit cryptomining -- There are several steps involved in this process, but for a hacker, it can be very simplistic. As it currently stands, individuals who surf the Internet can visit a certain page and download a fake app, allowing the hacker access to your system. This infiltration happens too often, especially in corporate situations where they follow the Cyber Kill Chain. This pattern works well when they are attempting to get inside systems to steal and extract information.


Circumventing the problem
So, how can this problem be circumvented, and why hasn't cryptocurrency gone mainstream yet? According to many in the financial sector, it is about to happen very soon. Cryptocurrency has caused a shift in regulatory agencies which are now seeking ways to impose restrictions and oversight on the use of cryptocurrency.

Cryptocurrency traders used to have a field day when there was no governmental oversight. Now, the tables are turning, creating tax liability for virtual currencies, and a watchful eye from the Internal Revenue Service. Ten years ago, it was fine to have cryptocurrency without having to pay taxes, the law now stands -- if you trade cryptocurrency, you have to report your activity to the IRS.


What does that mean?
It means investors of cryptocurrency must abide the same rules as taxpayers who are trading securities and other stocks. While things seem easy, in the cryptocurrency space, complications can quickly arise. Additionally, if you purchase something with cryptocurrency, you may have to pay capital gains plus any sales tax that applies to your purchase.

So, is this a good idea? As the regulations change, cryptocurrency owners may not like what is on the horizon, and for those who rely on the freedom of cryptocurrency on the dark web, those days may soon be over.