All eyes are on Bitcoin (BTC), as the largest cryptocurrency crossed $40,000 on Monday. Not surprisingly, the price hike came shortly after Tesla CEO Elon Musk tweeted that the electric car company will likely accept Bitcoin payments when miners confirm green energy initiatives.
However, while Musk’s tweet may have raised the price of bitcoin, some industry experts believe that bitcoin is not a cryptocurrency that can be exploited. For example, during an exclusive interview with Cointelegraph about Bitcoin 2021 in Miami, Caitlin Long, founder and CEO of Avanti Financial, said that unlike other cryptocurrencies, solvency is more important than leverage and liquidity when it comes to Bitcoin:
“Once you get into bitcoin and start losing money, I find it really helpful to learn what bitcoin is. We have a lot of people who are new to the industry now going through these lessons and we hope people learn from them. Especially in this beef. Of attention to the system in the market.For those of us who have been in business for a long time, we learned these lessons a long time ago – you don’t use bitcoin.
Regulatory Pressures on Bitcoin and Stack Coins
In addition to advising her not to use bitcoin, Long reported that there are new rules for bitcoin from Washington, DC — which she believes have been agreed upon with other government agencies. “It was Ray Dalio who said that the biggest threat to Bitcoin is success, because that means regulators are about to take a beating,” Long said.
While it may be, Long noted that the rules will not ban bitcoin or other cryptocurrencies as long as users adhere to them. She said:
“The basic idea is that if you pay taxes and you get regulated and you don’t choose the ratings, you’ll be fine. Those who try to commit crimes or defraud consumers, who don’t pay taxes and don’t comply with the laws won’t be fine.”
Long also notes that stablecoin regulation is a priority for lawmakers. In particular, it ensures that stablecoins do not infect the US dollar payment system with liquidity risks. To put this in perspective, Long mentioned an unintended hard fork that occurred within hours on Ethereum in November 2020 and said:
At the time, I thought, “What would happen if all the coins in the Ethereum ERC-20 stack had to be redeemed within minutes because they had to be burned on one fork and distributed to another?” “The traditional financial system does not have such risks in mind.”
In addition, Long commented on the risks associated with stablecoins in May and warned that the entire stablecoin market could collapse for other coins after the correction in the credit market.