If you haven’t been paying attention to the crypto market lately, you’ve likely noticed that the price of bitcoin cash has been dropping. As the article below explains, it’s because the fundamentals of the network have deteriorated and mining is becoming incredibly competitive. This will continue to affect the prices of the cryptocurrency in the near future.
Transactions are cheap
If you’re looking to spend a few dollars in the digital currency space you might want to look for a crypto to crypto exchange. However, it’s not quite as easy as it sounds. Fortunately, there are a few high profile sites like BitGo that do the lion’s share of the legwork for you. You can also enlist the services of a neophyte cryptography enthusiast who has a knack for securing your personal data with a few well placed passwords. Of course, if your wallet is a little light on cash, it’s still possible to make a go at your favorite gambling establishment. Regardless of how you go about it, the experience is certainly worth the effort.
In a nutshell, if you are considering buying or selling a few digits of digital currency you will likely come across a few questions like what is bitcoin, how much is it and where to buy it. Those questions are the first on your mind if you’re a newbie. While you’re at it, you might as well ask about the best places to spend your buck.
Mining is highly competitive
Mining is a process of adding new transactions to the public ledger of the Bitcoin network. This is the first step of the decentralized system of peer-to-peer digital cash, and it’s the only way to get new coins into circulation.
Mining is done by a group of computer operators, known as miners. They solve complex mathematical equations to validate and record transactions on the global ledger. The first miner to do so gets to add a block to the public ledger. Each miner receives a reward, or “block reward”, of newly minted bitcoins.
Miners also must use a large amount of energy. The computational power of their hardware doubles every year and a half.
As the price of Bitcoin decreases, revenue is down as well. China has recently started cracking down on mining. And some governments are as wary as environmentalists of its effects.
As more and more people join the mining game, the difficulty increases. A simplified analogy is a dice game, where more players win, making it harder to predict which players will win.
Cryptocurrency has become a tool for blackmail
The recent cyberattack on Colonial Pipeline illustrated the utility of cryptocurrency to cyber criminals. In fact, the event raised awareness of the risk of malicious hackers to critical infrastructure in the U.S. A coalition of private-sector technologists, law enforcement, and government officials – the Ransomware Task Force – has been working to track down perpetrators. It noted in its report that cryptocurrencies add to the challenge of tracking down ransomware criminals.
Chainanalysis, a company that specializes in data analysis for cybersecurity, recently gathered data about the current state of cryptocurrencies. Their 2021 Crypto Crime Report found that the number of criminal cryptocurrency transactions decreased in 2020, but the number of ransomware attacks will increase in the next year. These findings suggest that more needs to be done to protect consumers and institutions from these attacks.
One of the most important insights from this study is that policymakers need to better coordinate their efforts across sectors. For example, the SEC defined crypto exchanges as money service businesses, and that’s a critical aspect of protecting the public from fraudulent activity.