The month of January has turned sour for those who invest in cryptocurrency, with Bitcoin heading for its worse monthly decline since December 2013.
A Cryptocurrency is a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets. Cryptocurrencies are classified as a subset of digital currencies and are also classified as a subset of alternative currencies and virtual currencies. Cryptocurrencies use decentralized control as opposed to centralized electronic money and central banking systems. The decentralized control of each cryptocurrency works through a blockchain, which is a public transaction database, functioning as a distributed ledger.
Bitcoin, created in 2009, was the first decentralized cryptocurrency. Since then, numerous other cryptocurrencies have been created. These are frequently called altcoins, as a blend of the alternative coin.
Bitcoin is down about 29 percent this month, trading at $10,172 as of 8:35 in London, according to composite pricing compiled by Bloomberg. Rival coins Ripple and Litecoin have respectively slid about 45 percent and 29 percent, while Ethereum has managed a 47 percent increase. The four coins were little changed on Wednesday.
The U.S. Commodity Futures Trading Commission sent subpoenas on Dec. 6 to cryptocurrency trading venue Bitfinex and Tether, a company that issues a widely traded coin it claims to be pegged to the dollar, The firms share the same chief executive officer.
Facebook, meanwhile, is going to ban ads on its social network promoting digital currencies, initial coin offerings and binary options, warning they’re “frequently associated with misleading or deceptive promotional practices.”
U.S. regulators have moved to crack down on the industry after the emergence of various companies or people raising money through an ICO, or initial coin offering, with no apparent business behind it. The U.S. Securities and Exchange Commission said this week that it got a court order freezing the assets of a Texas-based initial coin offering that claimed to have raised more than $600 million. The order stops AriseBank from raising any additional cash from investors.
Cryptocurrencies have yet to sustain a rally after a record $500 million heist from Japanese exchange Coincheck Inc. on Jan. 26, further intensifying calls for increased oversight in global trading hotbeds such as South Korea.