- Bank of England said that cryptocurrencies could pose a systemic risk to global financial system unless governments make some tougher regulations.
- The cryptocurrency assets have exploded by about 200% in just 2021.
Cryptocurrencies could pose a systemic risk to global financial system unless governments make some tougher regulations, experts in the sector have said. Cryptocurrencies are often linked to volatility as its journey always been a rollercoaster ride. However, since last year its journey gathered pace with many leading businesses supporting its trek.
The cryptocurrency assets have exploded by about 200% in just 2021, from under US $800 billion to US $2.3 trillion.
Bank of England deputy governor Sir Jon Cunliffe said that cryptocurrencies could trigger a financial meltdown similar to the 2008 financial crash caused by sub-prime mortgages of around US $1.2 trillion.
Experts said the market cap of crypto market toughed US $2.3 trillion, which is though small as compared to the US $250 trillion global financial market but can cause global financial recession.
The governor said that the crypto market is one of the rapidly growing and volatile markets that have started connecting to the traditional financial system. As the crypto market is an unregulated market, it needs to be pursued as a matter of urgency.
Source: Copyright © 2021 Kalkine Media
According to recent data published by the UK’s Cambridge Centre for Alternative Finance, the US became the leading Bitcoin mining centre after China asked banks to stop facilitating transactions and imposed bans on crypto mining, which led to a 38% drop in mining globally.
In September 2019, China was the leading crypto mining center with over three quarter of all crypto mining, but now its share has effectively hit zero.
As crypto mining need enormous computing power, which uses huge amount of electricity and contribute to global emissions, miners are looking for cheap electricity to fuel the boom in the virtual currency that’s leading towards record high again after losing almost 53% between April and July from its all-time high of around US $65,000.
Bitcoin has been on a bull run for the past few days as its prices hit US $55,000 last week with market cap of US $2.3 trillion, an elongated bull run is being predicted by the market participants.
On 14 October, Bitcoin was priced at US $ 57,981.08, up by 4.81% in last 24 hours, however, gaining 5.48% in the last seven days with market capitalisation of US $ 1.09 trillion.
Birth of Bitcoin
Bitcoin was the first established decentralised digital money that is based on blockchain technology, which manages and records all the transaction and adds blocks in a liner chronological order, and it is not controlled by any central authority. Bitcoin was created in 2009 on the heel of the 2008 economic recession by someone knows as Satoshi Nakamoto, who posted a peer to peer Electronic Cash System through mail to a cryptography mailing list.
Past Bitcoin meltdown
In 2009, Bitcoin software was made available to the public and in 2010 it was valued for the first time when its prices increased from just a fraction of a penny to US $0.08 when programmer Laszlo Hanyecz decided to buy two pizzas in exchange of 10,000 Bitcoins. Since then bitcoin prices has undergone several rallies and crashes.
However, Bitcoin started gaining popularity in 2011 and many altcoins started trading. In the same year, Bitcoin prices surged by 3,200% to US $32 in June, from US $1 in April. Then in November, its prices bottomed out at US $2 followed by rise in prices to US $13.20 in August 2012 from US $4.80 in May.
In 2013, Bitcoin underwent two price bubbles. The first of the price fall occurred when price crashed to around US $300 from US $1,000 in beginning of April and many investor suffered major loses. Then in December bitcoin prices hit US $1,156.10 followed by fell in prices to US $760 just after three days. These rapid changes in prices signaled the start of multiple slumps in coming years.
Then in 2014, Bitcoin became an attractive source for criminals and the world’s largest crypto exchange Mt.Gox closed its operations and the owners of 850,000 bitcoin, valued at US $450 million never saw them again.
In the beginning of 2017, the Bitcoin prices surged to US $1,000 and at the end of the year it touched US $20,089 and its market cap increased to US $300 billion from US $11 billion. Bitcoin gained popularity as governments around the world started creating their own digital currencies to compete with bitcoin. After the rally bitcoin prices crashed again in 2018 to US $3,200 and recorded a 625% loss.
In mid June 2019, the prices again surged over US $10,000, but again the prices fell to US $7,112.73 in December.
In 2020, global economies were shut down due to pandemic, but the bitcoin prices bust into volatility once again. In the beginning of 2020 bitcoin were trading at US $7,200 and its prices surged to US $18,353, up by 224% and increased further. The year 2021 has been the best yet one of the most volatile years in the history of the bitcoin. In April, bitcoin prices hit its all-time high of US $65,000 from US $40,000 in January, however between April and July the prices again fall by 50% to US $32,000.