Crypto: Why Governments Are Skeptical About Bitcoin

Crypto - Why Governments Are Skeptical About Bitcoin

Bitcoin has been the subject of debate and news since its inception in 2008. The cryptocurrency’s introduction has been heralded by supporters as the start of a new and more equal money market. The cryptocurrency’s roles in illicit operations, as well as its lack of legal recognition, are cited by critics as proof that it is toxic.

Meanwhile, governments all around the world are keeping a close watch on Bitcoin’s progress.  However, major economies, including the US, refuse to accept it as legal cash and with compelling motives to do so. Bitcoin allows residents of a country to somewhat undermine government authority by allowing them to bypass capital limits set by the government. It also aids criminal activity by assisting criminals in avoiding detection as well as by eliminating intermediaries through which Bitcoin has the potential to undermine the existing financial infrastructure system.

The function of the Federal Reserve in an economy is facilitated by governments. While central banks play a role in monetary policy, they cannot govern its usage. Governments allocate and manage the flow and use of money in an economy through several intermediaries, such as banks and financial organizations, and by so doing; they control how it is moved, where it is distributed, and how it is used. They also get profit from it through taxing individual and corporate revenues.

Bitcoin Exceeds Imposed Limits 

Capital controls are frequently used by governments to limit currency withdrawals that could debase the currency’s value. For some, this is yet another kind of federal control over economic and budgetary policy. The stateless feature of bitcoin comes in handy in such situations for bypassing capital regulations and exporting riches.

Bitcoin is Associated with Nefarious Operations

The potential to circumvent a nation’s established financial infrastructure is a goldmine for criminals since it allows them to hide their involvement in such crimes. The Bitcoin network is anonymous, which means that users are only recognized by their network addresses making it impossible to track the origins of a transaction or the identity of the person or company behind the address. Aside from that, Bitcoin’s network’s algorithmic trust eliminates the requirement for trusted contacts on both ends of an illicit transaction.

The Author

Ajisebutu Doyinsola

Doyinsola Ajisebutu is a journalist and prolific writer who takes a special interest in Finance, Insurance, and the Tech world.