One thing that allures people into cryptocurrency investing is the relative simplicity of owning it or buying it than stocks. At the same time, there’s no minimum amount to invest. Bitcoin and Ethereum online wallets are common nowadays and are integrated with local banks/tellers for deposits and withdrawals.
However what new investors or users often miss is the need to secure their coins- which entails several steps and keys that are not too friendly for a common user. These online wallets or so-called hot wallets are more prone to attacks, theft and other technical vulnerabilities. Thus it’s never the best way to store your coins.
The advent of cryptocurrency and blockchain have attracted opportunistic hackers and history recorded huge theft and highly impacting attacks such as that of Mt Gox Exchange which resulted to thousands of bitcoins lost and huge bitcoin price dip for months.
There is also the Decentralized Autonomous Organization (DAO), an attack to Ethereum smart contract that resulted to the hard fork of Ethereum Protocol.
Parity wallet, which serves as ERC20 token wallet and access to DAP environment also fell into the hands of hackers even when multisig features are in place.
Crypto exchanges BitFinex, Coincheck, Coinrail and recently Bancor, lost millions of dollars’ worth of cryptocurrencies through elaborate major hacks. There are still more recorded attacks that show that even though Blockchain is a revolutionary technology, supposedly trustless and tamperproof, creative and skilled thieves can find a fault in the system.
Unregulated comes with a (hidden) risk
Innovative companies seeking a jumpstart with ICOs are often successful. However, there is the darker side of the story that nobody talks about. Collecting a funding in cryptocurrencies comes with a challenge how to convert them into fiat and store in traditional bank accounts.
Currently, there is very little maneuver space for ICO funded companies working with banks and seamlessly move funds from digital to fiat. Banks perceive an unregulated crypto space as risky and ICOs are often pushed in the corner with funding their real-world operations. Just think of paying a rent for the office, computer hardware in store, salaries, electricity bill and a lawyer in ETH. It’s doesn’t really happen.
Digital crypto space is a revolutionary improvement and addition to the real world and vice versa. It’s time to bust the myth that unregulated is an absolute way to go.
Can crypto even be regulated?
Significant losses of money have led people to seek regulation – to ensure there are real-life assets to back crypto, reduce price volatility risk and increase institutional money in the market.
Japan and South Korea have paved the way for cryptocurrency regulation in Asia, and now Taiwan is seriously aiming to do so.
Taiwan’s Finance Ministry has previously confirmed its plan to formulate cryptocurrency regulations and will be enforced in the country by November 2018, mainly to prevent crypto from becoming a money-laundering tool.
A significant step for wider crypto users in the country and an invitation to Asian crypto startups to Taiwan – a promising opportunity and a hurdle being addressed by Formosa Financial, a B2B crypto startup that offers crypto security, treasury management, and payment services.
Crypto security will feature full brokerage custody with hot and cold wallets, as well as multi-signature wallets for utmost security. Treasury management will offer P2P lending as well as bank-issued credit lines based on crypto assets acting as collateral for fiat credits.
Payment services such as digital fiat and international wire payments will offer a universal cross chain solution whilst connecting with a mature banking layer. More information about the solution is found in their whitepaper.
Can Taiwan become an Asian Switzerland? The time will tell. And soon.