Cryptocurrencies have actually been around for a long time but have only gained strong grip in the market in past year. Bitcoin, as a famously decentralized cryptocurrency, is turning the heads of financial institutions, businesses, as well as governments around the world. However, its popularity is raising regulatory concerns. Governments all over the world are gradually taking steps to regulate cryptocurrencies, more specifically bitcoin. Crypto enthusiasts fear government regulations could destroy it. But will the governments’ attempt to control bitcoin work?
Government Attempts at Controlling Bitcoin
It’s understandable how some people get jittery about the matter. There have been several attempts at placing regulation over Bitcoin in the past years. But now that Bitcoin’s value has increased to extraordinary new heights, there are even greater arguments for governments to control it or accept it. Conceivably, bitcoin holders don’t want any regulation on cryptocurrency now and in the coming years. Though many countries authorize transactions using cryptocurrencies, they’ve been under constant scrutiny.
Some countries have even gone to a high extent banning the digital coins. They treat its possession and trade as illegal. The Chinese government prohibited financial organizations from using Bitcoin in December 2013. It caused a recession in the cryptocurrency’s value. Months later, in April 2014, quite a number of bitcoin exchangers, unfortunately, had their bank accounts shut down.
The U.S. has also made local attempts to regulate certain facets of bitcoin. The state of New York requires what they called a BitLicense used for Bitcoin-related transactions. It has specific rules for the member’s vetting and identification. While these regulations are concerning, none of them has prevented bitcoin’s growth. They only reveal the errors and weaknesses of any future attempts to pull down bitcoin.
Why Regulation Matters
Governments regulate fiat currencies, and they use central banks to abolish or issue money out of thin air. They do this by using what’s known as the economic monetary policy. They also control how fiat currencies can be moved. This enables them to trace currency movement. In fact, they can dictate who will profit from the movement. They collect its taxes, and they also have the ability to trace criminal activities. All of these controls are lost when non-government groups build their own currencies.
Why Cryptocurrency Is Going Strong
Just like its fellow cryptocurrencies, there are key elements to Bitcoin which make them effective as means of transaction. First, without any middleman required, they are very easy to transfer. They also can’t be linked to holders who prefer not to be identified. The great thing is that Bitcoin isn’t linked to any financial institution. Since the blockchain technology, in which Bitcoin is built upon, doesn’t require a body to operate it, it is functioning like a public ledger instead of a private entity. Aside from wallets, all you need is a network connection so you can conduct bitcoin transactions. People just can’t help but be passionate about it. This is why cryptocurrency is going strong.
The benefits of using Bitcoin are all huge issues for any government. But at this time, it is safe to say that regulation on crypto will not work. However, it still seems difficult to foresee how bitcoin will continue to progress in the future.