Cryptocurrency is a collection of binary data which is designed to work as a medium of exchange. Usually, digital coins are stored in ledgers. Besides, cryptocurrencies use secure cryptography to ensure that all transactions are safe.
The first cryptocurrency, Bitcoin, was founded by Satoshi Nakamoto in 2009 and since its invention, it has helped expand access to monetary services and brought about quicker and more smooth worldwide transactions.
Despite the valuable effect of crypto in finance, the Government in some countries still feels wary about it. Check out why most governments dread cryptocurrencies.
Loss Of Control
In almost all the nations of the world, the country’s currency is under the jurisdiction of governments. The traditional currencies are easily controlled by the government compared to digital coins. Unlike the traditional currencies, the government may find it difficult to collect taxes on digital coins and other revenues.
Due to their control over the traditional currency, they find it easy to track criminal activities which are carried out with the currency
Also as a result of decentralization, the government loses control of the money system with the introduction of cryptocurrencies. Because the fundamental technology of cryptocurrency prohibits any central authority from approving any transaction, the government is unable to oversee monetary policy and loses power. As a result, certain economies are wary about crypto.
Because of its decentralization and anonymity, a growing number of criminals are turning to bitcoin as a feasible means of carrying out unlawful operations. The bitcoin platform is being used by cybercriminals to steal money from users. The bitcoin network is used by several criminal cartels to exchange narcotics and hazardous substances. Terrorist organizations are also participating in bitcoin transactions for trafficking weapons.
Threat to Central Banks’ Operations
With the support of central banks and other financial institutions, the government maintains sovereignty over the nation’s finances and economy. Many central banks have lost businesses as a result of Bitcoin’s growing acceptance, which is ultimately a loss to the government. No wonder most governments are against using cryptocurrencies as legal tender.
Instability of Digital Coins Value
Some cryptocurrencies, such as bitcoin, are still in their infancy. Bitcoin’s value isn’t steady, therefore it’s difficult to utilize a currency with an unstable value. That is why some nations are delaying their acceptance of bitcoin as a legitimate financial system for a few more years. A lot of investors still have doubts about cryptocurrencies. However, with Bitcoin value constantly increasing, only time will tell its future.
How Crypto Has Helped Boost The Economy
Crypto has greatly impacted the lives of people, especially poor people. Though argument tends to prove that cryptocurrency only favor well to do people who have enough funds to buy enough of it, stock it up, and wait for the next time the value rises but here are some ways crypto can help even the poorest person
- Increased access to finance – Most industrialized countries do not have access to high-quality education. As a result, these countries’ living standards are low, and unemployment rates are high. As a result, many people in these nations are unable to access and use financial services. That is where cryptocurrency comes in. Trading crypto does require technical skills so even someone that is not educated can use crypto as long as he/she has an internet-connected device.
- Low transaction fees – Customers have long been charged substantial transaction fees by banking institutions and credit businesses which have left many in the fear of making transactions. These fees are high because financial institutions rely on third parties for transactions. Because cryptocurrencies like Bitcoin erases the need for third parties in transactions, money transfers are quicker and less expensive
- Unrestricted capital flow – Cryptocurrency is a digital currency, which means that no central bank, government, or investor can control its supply, thereby resulting in unrestricted capital movement.
Cryptocurrency, having contributed greatly to the financial ecosystem, has its flaws. While some of these flaws affect the country, most of them directly affect the government. More reason they frown at it. Only time will tell whether bitcoin will become a worldwide currency. Visit OSOM Finance to learn how to use your digital coins.
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