The Politics Affecting Cryptocurrency Adoption In Countries - Bitcoin
I may not know much about Bitcoin and many may not know deeply what it all entails but one thing is sure and that is "Cryptocurrency is changing the way of the world financially" and not just that it is the highlight of #Web3 and people will only find ways to get to know more about it and get involved or they will have listen to people who are making good use of the opportunities this evolving change and how it is making lives around better.
While Bitcoin is making waves around the world, it is faced with government wariness as it also poses some threats to the economy of a country... How? We will get to that in content.
Bitcoin was introduced in the year 2008 white paper and ever since then has brought about controversies and news that kept people away and some curious to know more about it. It also got critics as it plays roles in criminal activities by individuals who uses it as an excuse. There are reasons to the politics against Cryptocurrency Adoption and many countries refusing to recognise Cryptocurrency but El Salvador has adopted Bitcoin in June 2021, that has set a possibility that more countries would follow after much politics about it.
It has also been pointed out that Bitcoin has enabled citizens undermine the government authorities and money policies in a country. Bitcoin has also thrown the financial system of countries into uncertainties and destability. In short, Bitcoin poses three challenges to a country... It can not be regulated, it is used by criminals and it can help citizens overcome capital controls. More will be shared on these points.
Before that, it is a good point to note that until the ecosystem of Bitcoin matures (this might take a long time or not), the Governments or established authorities will continue to see it with uncertainties (distrust). What do the Government trust more if not Cryptocurrency (Bitcoin)?
For years now since I've known what trading without the old way (trade by barter) means, every country traded with Fiat. Fiat is a currency created and issued by the Government for citizens to use as an exchange when trades, contracts and services take place. Fiat is backed by the government fully and is given more credit as it has been the way of every country until the emergency of the Cryptocurrency. Bitcoin is seen as a digital currency created out of nowhere, that is the currency is not backed by physical or sellable assets which makes it very different from the fiat the Government has placed policies on.
The Central Banks in an economy of every country is facilitated by the Government so they do not have the authority to regulate the way the fiat money is used but do have policies for these money. One thing that is common with the policies made about the fiat is the intermediaries put in place like the Banks, financial institutes and the Government. These intermediaries regulate the flow and use of money in a country by dictating how money is transferred, sectors the money should be distributed to and they also trace how these money are being utilized. Of course, the Government earn revenues from taxing individuals as they make use of the fiat currency provided by they themselves.
What has Cryptocurrency (Bitcoin) adoption got to do with all these?
Bitcoin undermines and demantle the whole money system if it is adopted as it does away mainly with the intermediary aspect. The Central Bank and government policies around fiat currency will no longer be needed if Bitcoin is adopted as it can be produced by anyone running a full node or gotten through peer to peer transfers... These actions need no intermediary to happen.
If more countries would accept Bitcoin like El Salvador is still a question yet to be answered with these three pointed out reasons by the Government to not adopt it. They are still trying to understand the effect Cryptocurrency could have on the economy but these three are the main ones they've figured out for now.
Bitcoin can overcome capital controls
The Government has placed some controls over the capital of the country's economy and this is done to prevent currency overflow value loss. With such a situation, Bitcoin and it's stateless nature will definitely overcome the capital control put in place and wealth will be exported even more easily. A good example is the one that happened at China according to the update on Investopedia about a citizen who transferred a huge amount of Bitcoin to a wallet in another country.
The whole gist is that,
The country’s citizens have an annual limit of $50,000 to purchase foreign currency. A report by Chainalysis, a crypto forensics firm, found that more than $50 billion moved from China-based bitcoin wallets to wallets in other countries in 2020.
This obviously meant that the citizen converted the local currency to Bitcoin and transferred it away, this could have a negative effect on the country's currency.
Bitcoin could promote illegal activities
Not intentional but Bitcoin provides opportunities for fraudulent acts by those who want to commit them as they would be able to bypass existing policies and infrastructures put in place. The camouflage it provides these criminals makes it easier for them to carry out their crimes. An example is the one of a company that accepted Bitcoin payments and used it as an avenue to assist people who buy and uses guns and dangerous equipments illegally. They were caught by the FBI and a large sum of Bitcoin was seized from them.
Bitcoin is not regulated
Governments are still trying ways to put Bitcoin in regulation but no avail as the question about what Bitcoin should be used for is raised. Should Bitcoin serve as regular and daily transaction or for investment purposes only? No answers to that question and that places Bitcoin in a position of non adoption for many countries yet. With this, until Bitcoin ecosystem matures, different countries Governments will continue to be provoked by it.
Posted Using LeoFinance Alpha