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Cryptocurrency is changing the financial world

In+this+Friday%2C+Dec.+8%2C+2017%2C+file+photo%2C+a+man+uses+a+Bitcoin+ATM+in+Hong+Kong.+Kin+Cheung+%7C+AP
In this Friday, Dec. 8, 2017, file photo, a man uses a Bitcoin ATM in Hong Kong. Kin Cheung | AP

In this Friday, Dec. 8, 2017, file photo, a man uses a Bitcoin ATM in Hong Kong. Kin Cheung | AP

In this Friday, Dec. 8, 2017, file photo, a man uses a Bitcoin ATM in Hong Kong. Kin Cheung | AP

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If you haven’t been paying attention to cryptocurrencies, now is the time to start. Digital currencies are becoming more popular and causing a stir across America.

Bitcoin was the first cryptocurrency to emerge in America in 2010 and has become the most popular. Other currencies have followed suit, but they have not flourished with the same success. With cryptocurrency, investors can use their physical dollar bills to receive digital coins. Despite cryptocurrency’s popularity on the rise, the system’s fluctuating growth and difficulty retrieving information makes it a risky investment in the eyes of the government and financial businesses.

The government is fearful of cryptocurrency for two main reasons: the possibility of money laundering and the threat to America’s banks and currency system.

United States regulators are worried the system will promote illicit activities and money laundering. The system is decentralized, not controlled by one party and all of the information is encrypted. These conditions make it difficult to track transactions and the people behind them.

The main draw for cryptocurrency users is the fact that the system is decentralized. The digital currency has introduced a complete change in how people can conduct business and make transactions. People who were not able to do business with banks found a way with the digital currency. Users rely on peer-to-peer networks for the system to work. They enjoy using a system not controlled by the government, banks or third parties.

American banks are heavily regulated and monitored by the government. They follow strict laws when it comes to money laundering. Noncompliance can be devastating financially for banks. Because of this, banks are wary of jumping on the digital currency train. Cryptocurrencies bypass anti-money laundering regulations.

Ally Zacek | The DePaulia

On Jan. 3, the Wall Street Journal reported that Bank of America Merrill Lynch decided to ban clients from taking part in the Bitcoin Investment Trust by Grayscale Investments. In a memo sent to financial advisers, Merrill Lynch explains that Bitcoin is “too much of a risk” for investors. Financial advisers were not allowed to pitch the offer to any clients, offer investments or makes trades for clients. The decision comes after Bitcoin’s value decreased since the start of the new year.

U.S. regulators are informing users about the risks that come with using virtual currency. The U.S. Securities and Exchange Commission (SEC) posted guidelines on their website for those interested in investing to think about. Some points include investors asking what their money will be used for and what to watch for in case of fraud. The guidelines also state that there are limited recovery options if investors do become victims of fraud.

In December 2017, SEC’s Chairman Jay Clayton said in a press conference that there will be more law enforcement against internet coin sponsors if they continued to ignore security laws. This comes after the SEC froze an asset of a repeat violator from the company PlexCorps.

Even with knowing the risks, investors aren’t deterred from wanting to dabble in the digital currency world. “It’s high-risk kind of thing,” said Erick Ovalle, Illinois State University graduate. He started on BitCoin about two months ago after watching videos on it. But he recognizes it’s a risk. “Once you put the money in, you have to think of it as gone and you’re not getting it back.”

There are some businesses that have started to embrace the move to digital currency as well. Microsoft, Subway and Expedia are some places accepting Bitcoin as a valid form of payment.

“The entire industry is just growing really fast,” Erik Vorhees, ShapeShift CEO, said in an interview with CoinDesk. “I think it proves the point that I’ve been arguing a long time that cryptocurrencies are not exclusive. They don’t grow by just competing with each other. The entire industry is growing by competing with traditional finance.”

1 Comment

One Response to “Cryptocurrency is changing the financial world”

  1. AJ on January 16th, 2018 11:38 pm

    I think you nailed it perfectly. Big banks are breathing down the governments neck because the money we trust them with (that they use to invest in hedgefunds) is now leaving the country and entering a foreign market. They don’t like when people make big financial gains with the money the worked hard for and earned. Nope, banks would rather charge you $25 a month to put your money in an account, offer a disgraceful .5% yearly interest, and if you’re lucky enough to get a credit card with them, they’ll give you a $5000 limit with a 29.99 APR. It’s disgusting these big banks, and they think by having big bad 7 figure earning CEO puppets speak out against crypto that it’s going to stop the investors and stop the growth? HAHAHA!! Fools have made a living off the working man, and now the working man wants to invest and take a potentially rewarding risk! Tax evasion you say?! When the money is converted to USD, and I assure you it will be, you’ll get your taxes. That lambo, benz, bmw, house, fancy clothes, that USA have already charged and import tax on, will be paid again when the investor becomes the buyer of fancy things. Foolish Government won’t think outside the box and see that people just wanna have fun, take a gamble, and live life. This is what happens when we give too much power to those in office. They try to take away our ability to invest OUR OWN MONEY. If they collapse this system, they’ll see a second civil war, and the money that investors made were not just buying houses and cars that they paid taxes on, but they were also buying some pretty fancy things with triggers that fire pointy things. More power to the people. Ignore the paid off critics who are also investing in crypto in hopes to keep you at the bottom. As hopsin said, they have a plot to keep you on the bottom while they’re on top! Rise above these career politician criminals and corrupt banks. Nothing backs crypto? It has a finite amount that can’t be said about the printed dollar backed by promises and the people. There is 3.5 trillion gold mined since we started mining, and our “gold standard” backs it? Yet there’s more the that 3.5 trillion in circulated money. What is backing the rest? NOTHING but lies and inflation. Let’s get it all back! Let’s be wealthy midclass and make the poor less poor, and the rich can stay rich, we’ll just join them, like the blue collared underpaid 9-5 fucks we are!

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Cryptocurrency is changing the financial world