Summary of Bitcoin Adoption and Regulation.
Australia:
Bitcoin will be treated as money in Australia by July 1, 2017 and will be exempt from GST (goods and services tax). Bitcoin traders and investors will not be taxed for purchasing and selling Bitcoin through regulated exchanges and trading platforms. Starting July 1, double taxation and trading and goods and services taxation on Bitcoin will be exempted. The Australian government wrote:
"The Government will make it easier for new innovative digital currency businesses to operate in Australia. From 1 July 2017, purchases of digital currency will no longer be subject to the GST, allowing digital currencies to be treated just like money for GST purposes. Currently, consumers who use digital currencies can effectively bear GST twice: once on the purchase of the digital currency and once again on its use in exchange for other goods and services subject to the GST."
Russia:
Only a year ago, Russia’s Finance Ministry was threatening with jail time anyone using digital currencies. However, recently Deputy Finance Minister Alexy Moiseev stated that the authorities hope to recognize bitcoin and other cryptocurrencies in 2018 as they seek to enforce rules against illegal transfers. Russia is an interesting case because of its leadership and government decision-making. So this piece of news should be no surprise, at all.
Africa:
Africa is especially open to bitcoin and other cryptocurrencies adoption. In various places over the Internet, it is termed the "unbanked continent", with as much as 66% of Sub-Saharan Africans not having a bank account. Currently, there are more than 1,000 merchants accepting bitcoin in South Africa alone. People in South Africa have repeatedly experienced government failure and hence hyper-inflation and total money devaluation. Also, the average African does possess a smartphone, so there should not be any technical hurdles. The only missing link would be awareness and proper promotion.
Japan:
On April 1, 2017 Japan passed to accept Bitcoin as a legal payment method. More specifically, the current regulation treats bitcoin as a type of prepaid instrument, while also scrutinizing bitcoin exchanges. Effectively, after the regulation passed, two major Japanese retailers partnered with Japanese Bitcoin exchanges to start accepting the digital currency for payments. About 4,500 stores in Japan currently accept Bitcoin as payments. That fact would probably make Japan the most bitcoin-friendly country in the world.
South Korea
The second most bitcoin-friendly country in this list. Koreans are traditionally familiar with virtual currencies. Korean gaming companies such pioneered in-game virtual currencies back in the early 2000s. A major bank (KEB Bank) even created a virtual branch in a Korean social network (Cyworld) to provide banking services for the network’s digital token.
For Koreans, it is a question of time and assessment of the proper technology to back up a potential national cryptocurrency.
China:
In February of this year, the People’s Bank of China came down on the 3 largest Bitcoin exchanges, BTC China, OKCoin and Huobi, in response to what it perceived as potential violations of various anti-money laundering rules. This placed a four-month freeze on withdrawals from the Bitcoin exchanges and thus halted the exchange of Bitcoin in China. However on June 5, 2017 withdrawals were resumed. Many analysts attribute the spike in bitcoin price at that time exactly to those news.
United States:
The US dollar currently makes up to 45% of Bitcoin exchange volume by currency, far greater than any other currency, EUR for example. It is exciting to think what would happen if bitcoin were to be legalized in the US. There are some baby steps in that direction. For instance, on September 17, 2015 the Commodity Futures Trading Commission (CFTC) classified Bitcoin as a commodity. Yes, SEC did renounce the bitcoin ETF this year. In fact, it would have been a surprise if they accepted it - it's just a bit early, I think.
Let's recap
The matter is that every use case of bitcoin can be replicated (maybe even more successfully) by another cryptocurrency. So I see two major development paths:
- one for bitcoin itself, being regulated, part of KYC rules and what not;
- and one for an implementation of national cryptocurrencies, where the government could leverage some of bitcoin's lessons learned to actually incentivize its citizens. That would be especially viable in under-developed and developing countries with tax collection problems.
Conclusion
There are various speculations for bitcoin's price in the next 10 years - from 10,000 USD all the way to a 1,000,000 USD per BTC. Let us assume that in ten years cryptocurrencies in general, not just Bitcoin, will account for 10 percent of the average daily volumes (ADV) of fiat currency. Foreign exchange ADV currently stands at just over $5 trillion, according to the Bank for International Settlements. So that 10% of $5 trillion would mean a $500 billion valuation of the cryptocurrency market. If Bitcoin were to be 35% of that $500 billion cryptocurrency market, this would mean that $175 billion worth of Bitcoin would be traded everyday. And if the supply is about 17,000,000 BTC at that time, it would mean a price of about 100,000 per BTC. However, it is quite unknown if bitcoin will still hold the first place in terms of market cap.