- Cryptocurrency fell by $2,000 early on Thursday
- Demand for Bitcoin in South Korea sparks gambling addiction fears
Could the Bitcoin bubble be about to burst?
The notoriously unstable cryptocurrency spent 2017 climbing to dizzying heights, but it seems to be tanking this year. Is 2018 the year bitcoin reveals its true colours as a gamble, rather than an investment?
On Thursday the digital currency’s value dipped by 13.5%, or around $2,000, after spiking in December at a staggering $19,850 per coin. And by Monday, the price had fallen to $13,720.
The sudden drop in value has been attributed to South Korea’s decision to ban cryptocurrency trading, and to close down all national exchanges. South Korea has been a key driver of growth for the currency, with huge demand from investors within the country.
Other nations have also acted to prohibit Bitcoin trading, including China and Egypt. Aside from concerns that Bitcoin is being used to fund illegal activities and to evade taxes, some governments feel Bitcoin itself represents a risky form of gambling.
Bitcoin linked with illegal activity in gambling regions
All Bitcoin transactions are completely anonymous. Demanding gaming debts or ransoms in cryptocurrencies helps criminal gangs stay under the radar – and this is causing concern for authorities in a number of nations.
“I think it’s true to say that certain very colourful characters previously associated with the negative side of gambling – particularly here in Macau – have shown an interest in cryptocurrencies, and understand the opportunity it presents to avoid borders when seeking to make cross-border transactions,” risk consultant and former Hong Kong police commander Steve Vickers told GGR Asia.
“Unfortunately the side effect of cryptocurrency is the anonymity it provides.”
Chinese authorities have acted to close Bitcoin exchanges amid fears that it is being used to evade government duties.
“China’s programme to contain capital outflow could be circumvented quite easily if cryptocurrencies took on a wider distribution,” Vickers points out.
He notes that Macau relies heavily on VIP betting, and that the high value bets associated with VIP gaming present the greatest risk to the city’s casino industry – especially when an unpredictable cryptocurrency is added to the mix.
Bitcoin as gambling: fears of addiction
In addition to criminal links, authorities round the world are highlighting issues with the concept of investing in such an unstable currency.
The stock market itself poses risks, with traders staking cash in the hope of a payoff – and Bitcoin is one of the most extreme and unpredictable exchanges in the world.
Just a few years ago a single coin was worth less than 0.3% of a dollar, last year it reached the heady heights of almost $20,000, and on Friday its value levelled at $13,642, before creeping up very slightly.
Some experts say a single Bitcoin could be worth as much as $1 million in the future – though this is pure speculation, of course.
Many have likened cryptocurrency investment to gambling, leading to a top imam in Egypt declaring Bitcoin trading is illegal in Islamic law.
In South Korea, where Bitcoin exchanges are being closed down, demand for the cryptocurrency keeps on growing.
55,000 people have signed a petition demanding the government reverses its prohibition of Bitcoin. This surge in demand is causing concern over gambling addiction prevalence, with some suggesting vulnerable individuals are being exposed to gambling harm by investing.
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