The concept of Bitcoin was introduced in 2008 with the release of a research paper that described how to solve the double-spending problem. In economics, double spending means spending and later invalidating an electronic transaction by showing that one has already spent the same amount. Since then, it has been hailed as a lifesaver for modern currencies because it overcomes this fundamental flaw in our current monetary system. However, this revolutionary new currency has received mixed reviews from the public and critics and in this article we look at why governments and banks are not fond of bitcoin?.
Governments and banks are not fond of Bitcoin. This is because they are currently the only institutions that can issue electronic money in most countries. They will lose this right if Bitcoin becomes more popular because all transactions will be made peer-to-peer without a central authority issuing or even regulating the currency. This prospect might be frightening to them, but it also presents an opportunity for Bitcoin users. Cryptocurrencies like Bitcoin can be used to evade capital controls. The bitcoin investment has been on an upward trend lately, and if you want to invest in this cryptocurrency then Bitcoin Smarter could be just what your portfolio needs.
The case of governments: Preventing abuse by regulating bitcoin
Governments have a strong interest in Bitcoin’s price because their currency is usually pegged to the US Dollar through a fixed exchange rate. Any kind of fluctuation in the value of their currency will influence their economy negatively. Bitcoin’s value is completely unrelated to the US Dollar, and its fluctuations do not affect the dollar at all. So, if Bitcoin appreciates, it will bring a boost in the consumer price index (CPI) of countries like Venezuela that have been ravaged by hyperinflation. This will lead to less demand for their currency, which can only lead to inflation.
Governments are also concerned about Bitcoin because criminals are using it as an anonymous payment method for illegal activity. They fear that the increased demand for Bitcoin will attract more criminals to make illegal payments. Miners are attracted to this idea because they make good money off of Bitcoin by selling their computer power to mine coins. In return, they get the right to sell their virtual currency after one year. This gives them a powerful incentive to support Bitcoin’s price. Governments also see a risk that Bitcoin can be misused by allowing tax evasion and money laundering due to its anonymous nature.
What about banks?
The banks, on the other hand, are not too worried about Bitcoin’s price. They see its use as a payment method to be a success because it can help make their services faster and cheaper by avoiding the need to handle cash. In return, they will gain more fees from transactions made with Bitcoin compared to traditional methods. They are also worried that Bitcoin may disrupt their business because it allows people to transact even if they don’t have bank accounts at all. They would rather regulate it rather than risk losing business. Bitcoin’s decentralized payments system is another major concern for banks. If a credit card company gets hacked or a merchant decides to implement a “smart” terminal, it can cause big problems in the payments system. Banks have been trying to develop their own digital currency since the mid-1980s but failed because they did not have any technological advantage over Bitcoin and were unable to source enough funding.
Why are governments wary of Bitcoin?
Governments are wary of Bitcoin because it allows people to transact freely without any interference. They see this as a threat to their right to regulate their economy and protect the value of their currency. Governments are also concerned that Bitcoin is being misused by criminals, tax evaders, and money launderers. They have a point because Bitcoin’s anonymity makes it hard for governments to regulate these crimes. If cash loses its popularity due to its anonymity, it would be impossible for governments to regain control over the flow of money in the economy.
The Path To Regulation:
Governments and banks are not going to just let Bitcoin take over the world without any regulation. They would rather regulate than ban it, but they will try to do this without completely losing control over it. To do this, they will try to implement bills that prohibit certain countries and banks from using Bitcoin. The goal is to create a bunch of regulations that would allow them to have some control over the currency but also prevent them from losing all their financial power by having all transactions done via Bitcoin.
Bitcoin will rise up to the challenge of regulations by adapting itself to these changes. The blockchain technology that Bitcoin is based on is also decentralized, which means it cannot be controlled by any person or government. As a result, regulations that target certain countries and banks will fail because the blockchain network is accessible worldwide. The only way to take control over Bitcoin would be to shut it down by hacking all the computers that support it, which would also result in a major hack of the entire blockchain network as well. The governments and banks can only do this if they have absolute control over the blockchain network and have enough resources.
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