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Given the convenience of established currency and payment systems, what is driving the ever-growing interest in Bitcoin and other virtual currencies?
It is unlikely that bitcoin will be used as a currency for payments in the near future. Therefore, the current cost of each transaction is too high. However, bitcoin could be used as a form of security storage, comparable to gold or other high-value metals, as it is the best proof of the cryptocurrency concept. Bitcoin has never been hacked, has existed longer than any other cryptocurrency and is the best example of blockchain technology.
Bitcoin has made such a significant profit for some investors that it is likely to continue to be seen as a kind of investment product for high-level risk investors. It is also the most common currency for buying altcoins (eg, Ethereum and Ripple). People who are interested in crypto-technology and how cryptocurrencies work will always have some contact with bitcoin because it is the best known cryptocurrency worldwide.
Has your jurisdiction taken steps to regulate virtual currencies? What is their current status?
The Federal Financial Supervisory Authority (BaFiN) is very active in discussions about the regulation of cryptocurrencies, initial coin offerings (ICOs), security token offerings (STOs) and token generation events (TGEs), among others. Currently, Germany uses the existing legal system designed for stocks and other securities to regulate all legal issues connected with cryptocurrency, meaning that the legal framework does not exactly fit the needs of crypto, ICO and STO businesses. However, the government and BaFiN are working together with the European Union to find an EU-wide solution to all the legal questions that are appearing. Significant discussions are underway across Europe at the moment, regarding how financing with cryptocurrencies should be regulated and whether existing law can handle new challenges. Liechtenstein, for example, has passed the first blockchain law, and Germany and other European countries are likely to follow. The market for ICOs, STOs and TGEs made billions of dollars in the past two years. This new kind of crowdfunding is a reality which should not be ignored by the legal system.
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