While cryptocurrencies – the largest faction being Bitcoin – are regularly gaining popularity with the general population, governments around the world are becoming increasingly worried. Typically, conventional currencies associated with specific countries are regulated by the government, essentially so that they can dictate, track and monitor.
Value is given to a specific currency, and the residents of that country must adhere to all of the regulations, simply because governments possess the power. Now, if organizations other than the government are immersing their own currency into society, it cannot be treated like a government-issued currency.
So, taking all that into consideration, it’s no wonder the officials are so anxious. Let’s consider each aspect of cryptocurrency that puts fear into the heart of governments from practically every nation.
Loss of Control
For a government to lose a certain degree of control over something as crucial as currency, which has a direct impact on the overall economy, it’s very challenging for them to deal with. As cryptocurrencies are peer-to-peer networks, it places some control into the hands of the people of the country, and therefore, challenges the control of the government. As Bitcoin has become more popular globally,
governments are feeling insecure about their ability to control their economy’s currency.
Hard to Regulate
Cryptocurrencies aren’t actual forms of money, it’s just software on a computer drive. That, along with identities being hidden and Blockchain technology being publicly-accessible, creates a difficulty for governments when trying to regulate it. What makes it harder is the fact that even though it’s just software, it’s often used to make purchases and complete transactions, which are also features of real money.
Worry of Illegal Activity
A valid worry for governments is the risk of illegal activity involving individuals with hidden identities. For example, if people are using the anonymity of Bitcoin to deal drugs, launder money, traffic children, or fund terrorism, then people say that demands some serious attention. Another aspect of crime, which we’ll touch on next, is the problem of tax evasion.
It is no secret that a large chunk of a country’s economy is from the taxing system that a government puts in place. Now, as we’ve already mentioned, cryptocurrency isn’t classed as actual money, so it can’t be taxed in the same way. However, it is considered an asset and is usually taxed in the same way something like gold is. But, it’s often questioned if people actually declare the cryptocurrency they own.