02 November 2022 | ZebPay Trade-Desk
Governments around the world are concerned about Bitcoin and have constantly tried to stifle its growth. Despite these attempts, it has been relatively impossible to suppress Bitcoin and ban the general public from using it. There are several reasons why central governments would seek to control, or even potentially stop cryptos in general. One of the most common reasons for federal organizations to take an interest in Bitcoin is to regulate money laundering.
Despite a few instances where Bitcoin was used for unlawful activities, the crypto was created to solve fundamental problems that fiat currencies have faced. Blockchain technology is designed to offer immutability and prevent Bitcoin interference in all regions. Power is essentially vested in the holders of the digital asset. Users then collectively determine how much a single unit is worth based on supply and demand. BTC is the most common and largest crypto. All other cryptos are often referred to as Altcoins, an alternative asset to Bitcoin.
Governments are afraid of losing control of money as Bitcoin goes mainstream. While Bitcoin cannot completely replace all currencies in the world, BTC undoubtedly plays a key role. The future of finance is intertwined with the future of Bitcoin. The infrastructure surrounding the technology is making it extremely difficult, if not impossible, for governments to stop the Bitcoin revolution.
Governments thrive in three main ways that appear to have been badly hurt by the invention of Bitcoin. Most governments rely on the ability to regulate capital, control capital, and prevent illegal activity through transaction monitoring. Central banks, along with investment banks, commercial banks, and other financial institutions, are responsible for overseeing transactions.
Traditionally, it has been difficult for criminals to use banks and any form of digital transactions to transfer funds. Because Bitcoin has not been regulated or controlled, criminals freely transfer funds to anonymous addresses and governments cannot trace these transactions. Despite the availability of the public ledger, meaning transactions are open and transparent, it is difficult to determine the true ownership of addresses. This feature of Bitcoin technology is highly undesirable for governments and other stakeholders.
Moreover, blockchain technology is immutable, meaning that data once entered will not be changed. According to Satoshi Nakamoto, the creator of Bitcoin, the feature was designed to build trust within the blockchain. Transactions are also open and available to anyone within the network. These may be undesirable for secretive regimes.
Bitcoin allows users to send and receive cryptos without government interference. The Bitcoin ecosystem allows people to trade across regional borders. For these reasons, it is doubtful that governments will embrace Bitcoin as it is. Instead, most governments will continue to look for ways to regulate it.
Several movements have tried to regulate Bitcoin without real success. There have been multiple crackdowns on Bitcoin miners in the east. The regulations have cited the large carbon footprint caused by the Proof of Work consensus mechanism used by the Bitcoin network. It is certainly true that PoW consumes a lot of energy and harms the environment. However, the PoW consensus is possibly the most secure consensus rule protecting the Bitcoin network.
In essence, the general public trusts that the authorities deal with fiat currencies. Citizens in the US, for example, rely on governments and the Federal Reserve to steer the US economy by controlling the printing of fiat currencies and regulating interest rates, among other things. Bitcoin bypasses these authorities and provides citizens with the direct value of a currency, eliminating the need for the government as the central authority that regulates how money is transacted or used. There may be consequences, as, without the ability to control local funds, governments could become completely dysfunctional. However, the Bitcoin network aims to promote transparency, remove absolute control and facilitate free spending.
Given Bitcoin’s infrastructure, governments cannot stop Bitcoin. Many governments can ban Bitcoin, as they have, but eradicating the projects seems far-fetched. With Bitcoin evolving on its own and people poised to adopt the technology, there is nothing that can likely stop the revolution. However, it is safe to say that regulations can be enacted to restrict the use of Bitcoin within a particular jurisdiction as part of a country’s effort to retain control of fiat currency.
Bitcoin transactions have continued to increase over time, and the general public has continued to embrace the idea of freedom. It offers an alternative to fiat currencies, which continues to depreciate over time. Poor money-printing policies have particularly hurt fiat users, and many have continued to seek alternatives. Bitcoin has arguably met with tremendous resistance from authorities since its inception in 2009.
Despite the obstacles, the network has grown significantly and critics understand the importance of Bitcoin. Most governments have changed their attitude towards Bitcoin and instead looked for better ways to secure it. Cryptos like Bitcoin can offer great alternatives to government currency monopolies.
Today, Bitcoin is used by a few companies to make Crypto payments easier and more accessible. Recently, Mastercard has started partnering with banks to make crypto payments more accessible to people. Without a doubt, Bitcoin will be at the forefront as the most popular crypto with the largest market cap.
Like other financial assets, Bitcoin can be accepted by the central bank as long as it complies with regulations. For example, the need to implement Know Your Customer(KYC) is crucial to mitigate the risks of using Bitcoin for money laundering or illegal activities. For cryptos like Bitcoin, relative transparency is higher compared to fiat transactions. For governments, the fear of being in control is legitimate, as it threatens national sovereignty if control is lost.
Bitcoin has the potential to be an alternative currency. Citizens who wish to escape the pressures of government currency monopolies can use Bitcoin as a safe, acceptable, and legal digital asset. The fundamental characteristics of blockchain technology that ensure transactions are transparent, verifiable, and immutable make Bitcoin a reliable crypto. Bitcoin adoption is growing all over the world and today some countries have started adopting it and accepting Bitcoin as a legitimate asset.
You can now buy Bitcoin (BTC) on ZebPay.
Disclaimer : This report is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any investor. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. The Company has prepared this report based on information available to it, including information derived from public sources that have not been independently verified. No representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness or reliability of the information, opinions or conclusions expressed herein. This report is preliminary and subject to change; the Company undertakes no obligation to update or revise the reports to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Trading & Investments in cryptos viz. Bitcoin, Bitcoin Cash, Ethereum etc.are very speculative and are subject to market risks. The analysis by Author is for informational purposes only and should not be treated as investment advice.