'Government regulation on cryptocurrencies will not work'
Expert says proper value of bitcoin is $0
By Kang Seung-woo
At a time when the government is going all out to strictly regulate cryptocurrencies, a renowned blockchain expert expects the administration’s regulations will not work. The government is even thinking of banning all exchanges and forcing domestic banks to follow suit by practically making it impossible for people to invest in virtual money through their accounts.
Mark van Rejmenam
Mark van Rejmenam made the point in an e-mail interview with The Korea Times. As an author of the best-selling book “Think Bigger,” he is a big data strategist and also has great influence in the blockchain business.
“When we are dealing with technical innovations, especially in the information technology space, regulators always lag behind events. The time it takes to implement regulations and laws is too long to make them relevant for the digital space,” he said. “As soon as regulations are announced, the community will come up with new solutions.”
Rejmenam noted that there is a lot of opportunism to make a quick buck with digital tokens, which are just nine years old. But he expects the market will stabilize because people will start to see the actual value cryptocurrencies have.
In particular, he criticized the real-name policies that many governments, including Korea, are seeking to enforce.
“The whole idea behind cryptocurrencies is that it is decentralized, and a real-name system would be impossible to maintain. People can always move currencies from one wallet to another. Besides with over 1,400 cryptocurrencies such a law would be difficult, if not impossible, to implement,” he said.
Of note is that Rejmenam has very negative views on the outlook for bitcoin, which is the top cryptocurrency that came to town in early 2009.
He predicted that bitcoin will be the “Myspace of cryptocurrencies.” Myspace was the largest social networking site in the world in the late 2000s but soon lost popularity. It still creates traffic but is almost defunct with few using it.
The expert said that bitcoin will eventually fail due to four problems _ transaction costs are too high; the number of transactions per second is too low; it is a centralized currency with the main mining pools in China; and it consumes too much energy.
“I don’t think the (bitcoin) community will be able to resolve these issues, it is too much divided,” he said. “I think bitcoin has reached its peak, which I think was $20,000. The right price for bitcoin is $0, or close to that as it is a technically flawed currency.”
His eventual advice was “Don’t invest in bitcoin, look for other currencies.”
As other cryptocurrencies are trying to deal with the problems of bitcoin, he said that governments need to be cautious in regulating them.
“Cryptocurrencies are a completely new way of doing business, raising money, transferring money and making transactions. Bitcoin is only nine years old and as such, we are still learning how this technology works, how we should deal with it, how we can implement it within our products and services,” he said.