Bitcoin has raised eyebrows since its development in 2008. It was the first-ever digital currency that could run successfully without being run by any centralized authority. It was the first decentralized system of transaction ever established, which was seen as a threat for many governments. It was not long before bitcoin started headlining as a troublemaker and being shrouded in controversies, one after the other. However, even after being linked to the dark web and being known as a currency for nefarious activities, bitcoin has truly redeemed itself as one of the most reliable and prominent cryptocurrencies of all time. However, although famous people and influential investors are now endorsing Bitcoin and other such cryptocurrencies, governments still have their doubts about the nature of this currency and treat it with much caution.
Bitcoin and its ties to criminal activities
Illegal and underworld activities cannot be successfully run using traditional currencies because they are controlled and governed by a centralized authority. On the other hand, Bitcoin is the only financial institution that surpasses the legal and ethical bindings posed by Governments and banks and can be used without any link. This means that illegal activities can occur without worrying about being caught or tied to any activities. It is rampantly used in the dark web and throughout various activities that need to be conducted without government scrutiny. For this reason, governments cannot fully trust cryptocurrencies like Bitcoin.
Bitcoin undermines the value of traditional currencies.
Since Bitcoin has its free reign and cannot be tied down by the government as opposed to traditional money, governments fear that they lose control of the economy with the rising demands of bitcoin. Governments can control their capital and the value of money by restricting the outflow of money from time to time. This means that governments can design the rate of inflation and deflation to keep the value of money and the flow of cash in the market to some optimal level. However, Bitcoin is not the case, which threatens economies and poses a significant struggle for various nations.
To trust or not to trust
Governments have doubts about bitcoin and other cryptocurrencies, but some of these doubts are well explained. Fiat currencies or our traditional money has a vital role to play in our economy. Simply speaking, it is through fiat currency that governments can control the economy in the right way. Fiat currency is the currency issued by the government and is the conventional currency of a nation. Fiat money has the full faith of the government and its people and is constantly regulated and returned to the people in circulation. This means that the government helps people put their trust in Fiat money and act as a guarantee. However, in the case of cryptocurrencies like Bitcoin, it runs on a decentralized system operated by peer-to-peer technology. Therefore, you need to put your faith in the technology itself rather than an organization. This has led to some level of mistrust in people of all spheres and especially the government.
Cryptocurrencies are genuinely the currency of the future. The road has been quite tricky for Bitcoin, with various highs and lows at every point. While it might never be apparent when bitcoin may reach a level of stability, it cannot be denied that Bitcoin and digital currencies have taken the world by storm. With various governments being threatened by these currencies, it is right to imply that cryptocurrencies have specific characteristics that governments might fear. They are volatile, cannot be trusted at all times and are often linked to criminal activities.
However, blockchain technology is being smoothened every day, and diner optimization is all it will take to make bitcoin a little more trustworthy. With the right degree of knowledge and commitment, you will be able to get started on your Bitcoin journey now with cryptocurrency