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.
1. 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
2. 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
3. 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
4. Limited Taxability
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.