If you want to start a business on Bitcoin, you first need to be familiar with the law

  As a symbol of the heyday of Bitcoin, the Silk Road website has become the world's largest black market in just two years, and has achieved sales of $1.2 billion (about RMB 7.7 billion) in two years. According to Engadget , the FBI announced that they have arrested one of the most important founders of Silk Road since it was banned, Roger Thomas Clark, a senior advisor to former CEO Ross Ulbricht (who was arrested in 2013), in Thailand.

The Silk Road: A Glorious and Dark Turning Point

     Bitcoin was actually released as early as 2009, but it was unknown for quite a long time. One of the important reasons was that it had few related applications until the emergence of the Silk Road website in 2011. Contraband such as stimulants, hallucinogens, ecstasy, and marijuana can be found on it, and it is paid for by Bitcoin and delivered by express after special reports, making it impossible for regulatory channels to get involved.

     Just look at the price fluctuations of Bitcoin to know how important the Silk Road is to Bitcoin. The earliest Bitcoins were at a very low price for a long time, but it was the Silk Road's huge transaction volume of $15 million per year that really made Bitcoin flow and pushed up the price of Bitcoin.

     Although the emergence of Silk Road opened the glorious era of Bitcoin, the illegal nature of Silk Road itself also spread to Bitcoin. Bitcoin's popular decentralized anti-governmentism has gradually transformed into excessive freedom without any control, which has also made many countries stand against Bitcoin.

     In 2013, CEO Ross Ulbricht was arrested and prosecuted by the FBI for money laundering, conspiracy to traffic drugs, and indirectly causing the deaths of six people. After two years of trial, he was eventually sentenced to life imprisonment. When the news was released, the value of Bitcoin plummeted from $125 per unit to $85, a fluctuation far greater than any trading site scandal, hacking incident, or government statement.

The risk is not the service itself, but the law and regulation

     With the removal of the Silk Road cancer, it seems that the healthy development of Bitcoin has finally arrived, and a number of innovative companies in this direction have emerged on the Internet.

     The most typical example is to use the global transaction characteristics of Bitcoin to conduct cross-border remittances. Although the RMB has successfully entered the SDR currency basket of the International Monetary Fund (IMF) in early December, the Chinese government has never promised to achieve free convertibility in the traditional sense, and will only achieve "managed free convertibility" in the future. In this way, if Bitcoin is used on a large scale without actively accepting supervision, it will inevitably fall into the scope of "illegal exchange" penalties.

     From another perspective, binding the user's real identity information has become a necessary requirement for many Bitcoin application websites. However, for some users with impure motives, special strategies and means may still turn harmless services into payment channels for money laundering and illegal transactions.

     This is why we can see that many companies in this field choose to invest a lot of energy in maintaining their legal teams. After all, it is better to be safe than sorry. However, Bitcoin is a completely different concept from the previous ones. Some provisions of the law may be outdated, and some companies may introduce corresponding regulations in the future. These factors must be considered.

     Of course, there is another consideration. After introducing some supervision into the Bitcoin system, its decentralization and anonymity have been destroyed. The actual impact is difficult to predict and can only be revealed by time.

Finance is important, but databases can also

     In previous articles, we mentioned that blockchain technology is the core of Bitcoin's success. The most important application of this part is that multiple banks jointly use blockchain technology to develop the structure of the next generation of the global financial system. For the financial industry, the most important value of blockchain technology is to solve the security of the entire system, which is mainly achieved through key mechanisms and anti-tampering strategies.

     Due to the challenges to the existing structure of the traditional financial industry and the government, it is not easy to get a piece of the pie in the financial application direction of blockchain. By reducing the need for security and verification, it is also feasible to use blockchain technology for distributed replication, storage, backup and distribution of data. As demand continues to increase, I believe we will see the emergence of companies in this field in the near future.