Can the Government Regulate Cryptocurrency?

Cryptocurrencies and blockchain platforms like Dithereum are a relatively new concept that has made some severe signals in the financial output. So much that central banks everywhere are still altering to the innuendo and influence the technology. Bitcoin, blockchain, Dithereum and other upheavals prove that they are capable of transforming the status quo and advancing virtual currencies as a ditch. This makes it a likely opponent to completely replace traditional fiat currency, which puts governments in an awkward position.

A new virtual currency is coming to town, and while it’s already making a serious name for itself, there are still some fundamental questions regarding its implications in the future. From digital currency’s relationship with central banks to its role in international trade, here are some answers about the origins of the emerging technology and its potential impact on global markets.

While financial institutions, governments, and other regulatory bodies are still working out how to deal with the phenomenon of digital currencies, there are some changes we can expect. For example, Japan was one of the first countries to recognize Bitcoin as a currency officially. Like the UK, Canada, and Australia, other jurisdictions have followed suit by classifying digital currencies as assets or commodities. These classifications ensure that digital currencies are being regulated appropriately.

The point of this guide is to provide some clarity on cryptocurrency, digital currency, and the blockchain, and I will start with the basics and adapt them to the more profound topics at hand.

Should the government regulate cryptocurrency?

Cryptocurrencies like Bitcoin, Blockchain, Ethereum, dithered, and others exist. There are mixed opinions about government regulation of Cryptocurrencies. The problem with regulating Bitcoin and other cryptocurrencies is that they’re conducted over a P2P network. While governments have successfully handled venues, such as The Pirate Bay and Silk Road, many cryptocurrencies exist. The primary difference with cryptocurrencies is that transactions can be conducted over exchanges or direct transactions using your cryptocurrency wallet.

Cryptocurrencies are virtual assets designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units. Essentially, the supply of cryptocurrency tokens is not set by a central authority or government, and it also correlates to cryptocurrencies as a means of exchange. Deals using the blockchain can be conducted, authenticated, and recorded in the public ledger without third-party interference.

Currency is a means of exchange for goods, services, and debt. Currencies are created and managed by central banks called monetary authorities. But the governmental regulation has been approved in some countries, and some are still on hold.

Possibilities government can crack down upon Cryptocurrencies?

The number one way that the government could regulate cryptocurrencies is by taxing any fiat money you use to cash out a virtual token. The main caveat is that this would have to apply to specific permits, and a cryptocurrency owner could turn to another coin to cash out. Beyond this, many early adopters and hardliners prefer cryptocurrencies to exchange for essential goods and services over traditional fiat currencies.

Regulating cryptocurrencies sounds like a relatively simple task, but it’s almost impossible in reality. The obvious way that the government could regulate cryptocurrencies is by taxing any fiat money you use to cash out a virtual token. The main caveat is that this would have to apply to specific permits, and a cryptocurrency owner could turn to another coin to cash out. Beyond this, many early adopters and hardliners prefer cryptocurrencies to exchange for essential goods and services over traditional fiat currencies.

The government has a massive amount of power regarding cryptocurrencies, primarily due to the technological limitations of certain “coins.” The government could regulate anything from how you can use your money (i.e., forbidding purchasing tobacco with cryptocurrencies) to tax every dime you cash out from any virtual token, which could force those who want to cash out back down the crypto pyramid.

As the world embraces cryptocurrencies as a medium of exchange, regulators are increasingly looking at them as a new threat.

Pros and Cons of Crypto-Currencies

There are specific pros and cons with the decentralized applications we will acknowledge here.

PROS:

• Online go URL platforms, users retain anonymity until they cash out or interchange their tokens. Most currencies have regulated supply, which will cool inflation as mining more coins becomes harder (deflation).
• Investors can carry out intelligent contracts without third parties. Fewer exchange fees than credit cards or most major derivate-financial instruments. No correspondence for investing in a token, unlike a share. The increased competition allows for more excellent consumer choices.
• Currencies can be supplied for special privileges or merit within Daps and other blockchain function (not exclusively as a store of value).
• Universal access to new tokens.

CONS:

• Levity in the market affects a token’s ability to serve as a means of exchange. Many cryptocurrencies still bear scalability issues. Many blockchain networks suffer to keep up with demand. These factors continue to influence the volatility of cryptocurrencies.
• Every new cryptocurrency created is susceptible to the same problems that plague another crypto. These issues either limit their ability to serve as a medium of exchange or inhibit their use cases to function as banks, digital gold, or tokens d’état.
• For a cryptocurrency to be used as a currency, it must have price stability. Price stability means that the cryptocurrency price does not fluctuate significantly over short periods. Price stability is essential so that merchants can set prices in cryptocurrencies as they would with fiat currencies like the USD. If you are a retailer, you don’t want to receive $5,000 worth of tokens today, and then tomorrow, find out those tokens are only worth $3,500. This type of volatility makes it tough to sell products and services with cryptocurrencies.

Canadian Regulating Crypto and progress of other countries

Virtual currencies are rapidly becoming more mainstream in Canadian finances. Now more than ever, investors are looking to buy cryptocurrency in Canada. Since becoming the first government to pass a national law on digital currencies, Canadian regulators have remained proactive in their approach towards crypto. They are cautiously optimistic and are trying to promote innovation while at the same time protecting the interests of investors.

There’s a great business deal at stake for both America and cryptocurrency advocates, and musing over what the future holds for this tech in the long term is bound to cause anxiety. In any case, we must continue to bring attention to cryptocurrency’s benefits, which helps both laypeople and professionals alike learn about its many benefits.

Switzerland has taken a very different approach, sitting apart from the herd of Russia, Iran, and China looking to ban crypto. In fact, after drafting laws that laid out a regulatory framework for ICOs and tokens in June 2018 and establishing guidelines for blockchain technology earlier in the year, they are now providing a newly designed crypto-friendly banking system.

Blockchain technology and cryptocurrencies represent a paradigm shift in sharing, verifying, and storing information.

Concluding, it is clear we are experiencing a crypto revolution. The rapid pace of cryptocurrency growth and development is unlike anything the world has ever seen before. Cryptocurrency is the fastest global peer-group technology the world has ever seen in terms of how fast it is growing and how many people are getting involved. This level of growth will result in some growing pains; however, it will not halt the revolution or even stall it — at least not for long.