As the cryptocurrency market prepares for this week’s latest adventures, echoes from key events last week still hang heavy in the air. But what may impact this new financial tech space most in the months ahead still has yet to be revealed and will no doubt provide new jolts and power shifts.
Indeed, this is a tech space not for the faint of heart. Just when a bit of a stride seemed to hit for cryptocurrency, a downward spin took place and many were in a state of panic last Friday. Business Insider reported that nearly every major cryptocurrency dropped more than 15 percent. Neil Wilson, a senior market analyst with ETX Capital, told Business Insider via email, “The regulatory crunch appears closer than ever and sooner or later this market could be headed back down to earth.” In fact, all main cryptocurrencies had dropped from close to $500 billion to about $375 billion in that 24 hour period.
Reports said that experts in the field felt that decline was based upon impending regulatory moves. And the Facebook banning of cryptocurrency advertisements at nearly the exact same moment didn’t help matters.
Certainly, concerns as well as insights around regulations around the cryptocurrency industry, is definitely growing in volume. For example attorneys, Anthony DiResta, Da’Morus Cohen and Michael Court, members of the Holland & Knight Consumer Protection Defense and Compliance Team, recently wrote a blog post that examines how the Butterfly Labs settlement and subsequent private lawsuits could well be signposts to all facets of the ecosystem of blockchain technology and digital currency.
The post notes that the Federal Trade Commission (FTC) alleged that a company called Butterfly Labs participated in deceptive and unfair acts or practices in violation of specific FTC Acts in the sale and marketing of Bitcoin mining products and services. Specifically, the company, according to DiResta, Cohen and Court, posted a calculator on all of the company’s social media pages, including Facebook, encouraging consumers to measure their ROI with a Bitcoin mining calculator. The FTC also alleged that the defendants shipped outdated products to consumers and did not provide refunds.
Butterfly Labs agreed to a monetary judgment of $38,615,161; however, the judgments were suspended based on the defendants’ inability to pay.
No wonder all crypto eyes are on such cases. And as if such events weren’t bad enough, new reports of crypto pump and dump groups seem were reported on last week as well.
But just when it might seem like the end was near for cryptocurrency, the market began to move in a positive direction quite soon after it began its descent. According to Coin Telegraph, Cryptocurrency markets started rebounding the very next day, February 3, once reporting on regulations in India was more clearly communicated. They are still on an upward trajectory as of the writing of this piece.
But while many are concerned primarily with impending regulations, there are building trends on the digi- cultural side that are very much worth noting. The celebrity factor, particularly hip hop, as well as Millennial force are important elements to track given the wide breadth of both social influence and market size, respectively.
For example, while business outlets were reporting on the bitcoin noise dive just before the start of last weekend, pop culture outlets were covering entertainment mogul Curtis Jackson’s (aka 50 Cent) intersection with the crypto world. Moguldom.com reported that the rap artist and television/film producer’s Midas touch revealed itself again when Jackson had boasted on social media that day about a tech-forward move he made several years back. According to Moguldom, when 50 Cent’s Animal Ambition album was released on June 3, 2014, bitcoin payment service provider Bitpay handled the transactions. It was Bitpay’s first arrangement with a musician. The album earned about 700 bitcoin in sales, which is more than $400,000. Today, 50 Cent’s bitcoin is worth $7,770,000. 50 is reported to be the first hip hop artist to partake in this new technology before it became nearly a household world.
With this earnings information now visible, more recording artists will become both curious and open to various deals and that could have an intriguing impact on the crypto game given the massive fanbase and reach of many of today’s most influential hip hop talent.
While this is not a fact lost on several bitcoin companies, only a few lackluster attempts have been made to collaborate with prominent names in hip hop. The problem is that these are two completely different cultures, and the bitcoin side of the equation is in major need of those who understand both the digital currency and music worlds so that appropriate deals and strategies can occur otherwise, there will continue to be major scenarios such as that with DJ Khaled. Indeed, now is the time for smart bitcoin companies to start making new alliances.
The second digi-cultural trend-to-watch is that of the Millennial play. Again, at the same time the crypto market had a major dip, Recode noted that, in a similar manner to which the tech platform Robinhood changed the game for Millennials and the stock-picking playing field, the platform is now leveraging its draw with this massive demo for cryptocurrency. Starting just a couple of days ago Robinhood users in five states are now able to trade bitcoin and ethereum without any charge at all. The platform will be available for usage in more states after this February run and will also allow users to track up to sixteen different currencies.
While not a move that will change the crypto game on its own, this development for the Millennial market, along with the vocal support of major pop culture influencers such as 50 Cent, should be tracked for overall near-future impact on and pace of the cryptocurrency market because such moves impact rate of adoption.
And such movement could make regulatory concerns and standards even more important and more urgent for this new industry. DiResta, Cohen and Court have well-noted in their blog post that blockchain, does not exist as a single monolithic item. The post indicates that while the term blockchain first emerged to describe the manner in which bitcoin transactions are aggregated and processed in data objects known as blocks, which in addition to transaction data, includes a cryptographic link to the previous block; all blockchain technologies actually have three essential components: peer-to-peer (P2P) network, consensus mechanism and a database or ledger (i.e., hash-linked data structures).
“Given the uncertainty that surrounds both the future of blockchain technology and consumer protection laws,” writes DiRest, Cohen and Court, “companies should begin creating or modifying current compliance protocols to account for both blockchain technology and its impact on the consumer industry. These protocols may include implementing greater protection of virtual accounts or creating disclaimers to educate consumers on the technical aspects of bitcoin transactions.”
The three attorneys believe that this preparation is essential for both companies directly operating in the blockchain and cryptocurrency industry and those companies currently accepting (or planning to accept) cryptocurrency as a form of payment.
Such mandates and their potential pace will be a major challenge to those setting standards within the new crypto market. However, the true indicator of success will be not only those who will be able to expertly walk the regulation tightrope but also those who can do so while being in sync with the speed of fast-moving cultural trends and behavioral patterns surrounding emerging tech usage. Such factors, among others, will no doubt make for yet another action-packed week in cryptocurrency market in the U.S.