Crypto has generated controversy and made news worldwide since its introduction in a 2008 whitepaper. Crypto’s launch has been lauded as the beginning of a new, more fair monetary system by advocates. Detractors argue that the cryptocurrency’s participation in illicit activity and lack of legal recognition demonstrates that it is “rat poison squared.” On the other hand, the reality is unquestionably somewhere in the centre.
Meanwhile, governments the world over are closely monitoring Crypto’s growth. El Salvador, for instance, has embraced it as a form of retribution. However, major economies, like the US, have refused to recognize it as legal money in any form. Their justifications for their behaviour are persuasive.
In whom may we place our trust?
To appreciate why governments are concerned about Crypto, it’s necessary first to comprehend the function of fiat currencies in a country’s entire economy. The term “fiat” refers to traditional currencies, such as those issued by governments. Fiat money is issued by the government and backed entirely by the government’s confidence and credit. This means that in the government’s insolvency, the borrower will get both the principle and interest on the currency.
Crypto jeopardizes the trust cycle’s integrity
The decentralised nature of Crypto has the potential to destabilize the system as mentioned above. Its network removes the need for intermediaries and, consequently, all of the government’s system’s components.
Crypto is currently a decentralised currency that may be produced by anybody with access to a full node, obviating the necessity for a central bank. The capacity of two participants on the Crypto network to conduct peer-to-peer transactions shows that intermediaries are no longer required to manage and distribute money.
A mathematical construct known as a hash substitutes the trust chain that underlies today’s financial system in Crypto’s network. A transaction cannot be registered in the central ledger until all full nodes have accepted it. A single typographical or clerical error in the input field of a transaction may result in the transaction being refused altogether.
Crypto can evade government-imposed capital controls
Due to the risk that exports may devalue a currency, governments often impose capital controls to protect the currency’s value from being drained. Others see this as a continuation of the previous administration’s monopoly over economic and fiscal policy. Because Crypto is a stateless currency, it is a great instrument for circumventing capital controls and extorting money under certain circumstances.
Previously, Crypto was connected with illicit conduct
Avoiding a country’s established financial infrastructure benefits criminals since it enables them to hide their illicit activities while remaining anonymous. Because the Crypto network is pseudonymous, people are only identified by their network addresses. It is difficult to trace the origins of a transaction or the individual or organisation that owns an address.
Any government does not regulate crypto
Governments worldwide are still debating the best way to govern the cryptocurrency industry more than a decade after Crypto’s inception. There are several problems with Crypto regulation that must be addressed.
“Cryptocurrencies, particularly Bitcoins, are largely regarded as the most promising creation that this generation has attempted to improve or perfect in this economic frenzy of freedom.” -By Himanshu Maradiya (CEO, CIFDAQ)
Final Thoughts
Since its inception in the aftermath of the financial crisis, Crypto has been a source of contention for individuals worldwide. In recent years, governments have become wary, if not fearful, of Crypto. They’ve fluctuated between condemning cryptocurrencies and studying how they may be utilised to accomplish their objectives.
Despite cryptocurrencies’ propensity to decentralise and disrupt established financial infrastructure, the Crypto ecosystem is fraught with controversy and criminal activities. Because Crypto’s ecosystem has yet to form and no real-world use has been shown, current authorities will remain skeptical and critical for the future.
CIFDAQ has integrated security measures into the system, giving you peace of mind and assurance that your digital assets are being held with the most modern security safeguards.
