Cryptocurrencies were around for a decade by now. However, the topic stays controversial. There are plenty of people talking about cryptocurrency as a promise of a great future, but there are also lots of people still calling it a scam or a bubble. Also, the reports of the government trying to control or even ban cryptocurrencies altogether can be worrying. But what are the actual reasons behind it? Is cryptocurrency a threat to the government or international market? Let’s dive in.
All About The Control
Governments control currencies, among many other things. It is all to keep up with the world’s economic state, the country’s financial market, business environment, crime prevention, etc. Thus, fiat currencies such as the euro and dollar have value because governments say so. Their value is defined by the value of our trust in government and the currency (you can read more about this in our article — Why People Don’t Believe In Crypto?).
Crypto assets are entirely out of their Monetary Policy’s control. They were created to remove the middleman and let people have direct financial transactions without worrying about lengthy procedures, complicated policies, taxes, corruption, or limitations. But as the government does not control the digital assets supply, their liquidity, or interest rates, they can be quick to warn people about untrustworthy crypto volatility and wants you to stay above their safety net.
We talked about it a lot, and we will keep talking about it as we genuinely care about the security topic. Some of our other articles that you can read if you want to learn more would be:
- Achilles Heel Of Cryptocurrency Exchanges
- Why People Don’t Believe In Crypto?
- Could Cryptocurrency Save You From Looming Recession?
Yes, there have been many hacks and crypto-related thefts. There have been millions and billions lost in these hacks, scams, and thefts. Yes, you are responsible for your safety net, protecting your funds and accounts, checking the transaction history of coins, exchanges, or people you are exchanging with. That being said, the solutions are already here and coming. For example, the smart contract protocol is there to verify and enforce the transaction only if the previously set requirements are met by both parties. They can make transactions smoother and more secure. You can read more about this in our article — Meet ROKKEX Team: Blockchain Consultant Lukas Kairys.
However, in this case, we can also talk about security from the side of what comes after the transaction outside the exchange too. Unregulated assets could be used to finance crime intentionally. When operations are not overlooked and not checked by the government, there might be someone funding a terrorist group, next big scam, or any other illegal and dangerous business.
The government has taxes on everything and everyone. Every person and company pay them this way, making it the most significant source of the country’s income. Yes, cryptocurrencies are not taxed by the government. But it also prevents the government from knowing how much money you have, which they use to calculate your taxes. As they cannot know how much, if at all, you have received or spent in digital currency, the government tries to find ways to encourage you to use the services that do provide this information, so here comes the crypto bans or restrictions.
Without a doubt, one of the positives of introducing bitcoin or any other cryptocurrency was the opening of truly international trades. This way, even countries that are excluded from the trades such as Iran, Cuba, or Venezuela, could join in the market. It also opened doors to people from geo-restricted countries to bigger markets and more opportunities to invest in companies or get services from all around the world.
However, some countries prefer controlling the trades and putting sanctions on the countries that they have tense relationships with. We all know how quick and strict United States policy can be, when they decide to cut off a country (e.g., North Korea or China) and even threaten to do the same with any other country that does not follow with cutting that country off too.
Cryptocurrencies not only help to bypass such bans but can make any international transfer easier. For example, if someone wanted to make a money transfer between China and some EU countries, AML procedures of the central bank might be lengthy and complicated. The sender might even be required to provide the reason for the transaction. However, a crypto transfer does not go through AML or any other complicated process, thus making it quick and hassle-free.
Though, quite a few financially weaker or financially disconnected countries have already banned crypto. But those restrictions are more of a stop while they still consider crypto to be something unknown, not worth the trust and risk, and while they find a way to control it without it being completely banned.
Many people like the idea that, in a way, they control the crypto market. Cryptocurrency supply, rates, and liquidity all depend on the market, which usually responds to financial, political, or social events. While the government regulated currency market can be controlled to stimulate investment, encourage loans, generate jobs, avoid inflation or recession.
Of course, it is only natural that the government will want to control something to protect their status quo. However, what matters is that the innovations should not be banned but analyzed and incorporated some way that allows them to develop without damaging or endangering people and the country’s economic or political state.
At ROKKEX, we take security extremely seriously, and our crypto exchange is built on ‘Security First’ principle. We want to share our expertise with the broader public for the world to become happy, safe, and wise.
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