After becoming a worldwide phenomenon in late 2017, it’s safe to say that everyone is aware of bitcoin. It might be true, but still, only a small percentage of the world is actually trading it. It’s probably because although everyone is aware of it, there are still a lot of people that aren’t educated enough to buy bitcoin themselves. They’re probably still asking themselves: “how do you make money with bitcoin?”
Bitcoin is in a much better place right now. Before the popularity boom, people were still somewhat afraid of what bitcoin was. They didn’t know if it was a Ponzi scheme, a bubble, or something that could actually be legitimate. The point is, people were afraid that if they got into bitcoin, they were either going into a risky investment or they were doing something illegal. What they didn’t know back then is that bitcoin can’t even be banned at all.
Why would governments ban bitcoin?
Believe it or not, there are still countries in this world where bitcoin is banned. According to Coin Dance, bitcoin is only fully unrestricted in 111 out of 251 countries in the world. While the majority of the governments haven’t provided any information regarding the legality (probably because they’re still figuring out how to regulate it), there are still countries where bitcoin is illegal and restricted. Examples of these countries are Algeria, Bolivia, Vietnam, and Morocco. So why are these governments banning the use of non-governmental currencies? Here are a few possible reasons why:
If you understand bitcoin, then you probably know that bitcoin doesn’t need the use of an existing banking system. Some governments believe that if bitcoin were to be mass adopted by the world, then it would render the entire banking system irrelevant.
Although some people think that to be the case, there are other people who think otherwise. Some people believe that both cryptocurrencies and fiat currencies can coexist someday: that bitcoin doesn’t have to replace fiat. They believe that if banks start to accept bitcoin, it can do wonders for the cryptocurrency world and vice versa. People will end up using bitcoin for some things and other people would use fiat for other things. This will, in turn, mean that banks will have to compete for which can do the best at both.
Governments are afraid of cryptocurrency because there have been many stories of bitcoin being used for malicious intent. This includes drugs, prostitution, and even terrorism. From this point, it’s understandable that the government would want to cut this out. Since bitcoin is practically untraceable, then it poses a great threat to the country if it’s being used to fund illegal or malicious acts.
This is why bitcoin exchanges now are implementing KYC/AML (Know Your Customer/Anti Money Laundering) laws and rules on their respective platforms. KYC/AML requires users to identify themselves before ever trading on the platform. At least if illegal acts are made, an investigation can be made.
Why can’t bitcoin be banned?
With all the possible reasons why the government might be scared, why haven’t all governments shunned the use of cryptocurrency yet? Here are a few reasons why that might be:
Bitcoin is still in its infancy stages
Despite bitcoin having 10 years of existence under its belt, as a currency, it is still relatively in its infancy stage. No one is sure of where it’s going to go from here, and that includes governments. With it being in its infancy stage, governments are still not sure how bitcoin should be regulated. As said earlier, the majority of the countries around the world remain to have no information regarding the legality of bitcoin and this is because no one really knows how to regulate it.
Bitcoin is decentralized
Because bitcoin works in a peer-to-peer fashion, it is very difficult to block such a system. Even if governments and financial institutions were to make it illegal, there will still be people using bitcoin because of its peer-to-peer aspect. It’s hard to prevent people from using bitcoin when people are peer-to-peer bitcoin trading.
Bitcoin is part of a budding economic system
Whether governments and financial institutions like it or not, the community of startups, exchanges, miners, retailers, etc. is growing more and more every day. Bitcoin has legitimate applications which would be destroyed if bitcoin were to be made illegal.
Hoping for the best
Legality has been an issue for bitcoin since the very beginning whether it be people asking if using it was legal or authorities determining its legality. It has come a long way and bitcoin is a better place now. Not only is an economic system growing but bitcoin and peer-to-peer finance is being used to help countries with struggling economies. As long as there are people who benefit from bitcoin, there will always be users. As long as there are people who use bitcoin, it’s not going to go away.
It’s no secret that the whole world could possibly benefit from bitcoin being 100% legal everywhere. It could bring us one step closer to mass adoption and one step closer to fulfilling Satoshi Nakamoto’s dream of having an electronic and cashless peer-to-peer money system.
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