What is causing cryptos to crack? China’s censorship or FBI’s seizure of bitcoins: Here’s all you need to know  |  Photo Credit: PTI
Cryptocurrencies continue on a downward spiral with eight out of ten popular coins suffering close to 10-15% on Tuesday. What we are seeing is a global crackdown, be it China blocking crypto-related accounts on Weibo and also their move to consider linking illegal crypto activities with the country’s criminal law.
On Monday, the FBI said that it was in possession of a private key that could unlock a bitcoin wallet, which had supposedly received the ransom amount from the Colonial Pipeline hack last month. FBI is said to have recovered 63.7 bitcoins or $2.3 million in cryptocurrency. All this news has made the crypto community wary and rightly so.
Questions are being raised on the very fundamentals of cryptos. Are they really free from government control? Can Cryptos actually be traced? ET Now spoke with Ray Wang from Constellation Research in Silicon valley who said that moves like that of the FBI was sure to shake the foundation of cryptos.
“People are going to be surprised that US has the capability to track those bitcoins and track transaction payment. I think bitcoin on its own is save but tracing and capturing those transactions and getting those bitcoins back, that’s what everyone is going to want to know more about”
It is a matter of speculation as one still doesn’t know how the FBI broke into the wallet. There is a whisper that the FBI found a key to unlock the bitcoin wallet but how they discovered the key still remains a mystery.
“When you realize that there is a hack on the bitcoin wallet that becomes concerning. People know that bitcoin itself is not hackable, but the wallet can be and the key to the wallet can be shared. Not all bitcoin wallets are created equally as some of the hackers have come to realize this and this is leading to the downslide almost 8% of cryptocurrencies today”, Wang added.
Cryptocurrencies have suffered record outflows of $94.2 million in the last week alone. The top 2 cryptocurrencies, Bitcoin and Ethereum have tanked up to 10 per cent in the last 24 hours to $33K and $2,500 levels respectively. Is this volatility acceptable? and can cryptos still be looked at as a value asset class?
Wang thinks that the volatility is acceptable however if we need cryptos to work we will have to look into the bad and criminal elements that are using this as a transactional mechanism, he says. Governments will have to come in when there are cases of ransomware like in the colonial pipeline matter. They will have to look into the trade routes of illicit goods or arms shipments or human trafficking to weed out the bad.
Taking cues from the upbeat discussions at the Bitcoin 2021 conference in Miami, Wang believes that the crypto still has a long-run ahead. “There is a lot more good than bad when it comes to cryptocurrencies but you have to address the bad elements if you want it to be widely accepted”.
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