A form of digital currency, Bitcoin can be used in exchange for other currencies, products, and services. It is not printed and not handheld. Thus, unlike real cold cash, this digital currency works without a central bank or an administrator. In other words, it is not fully regulated by any law. The rise of cryptocurrencies like Bitcoin has concerned a lot of experts. It’s an issue whether Bitcoin should be tolerated by the government or not.
So the big question is, can the government destroy Bitcoin?
China’s Ban on Digital Money Trade
In September last year, China declared a deferral in the use of China-based digital money trade among all domestic trading in yuan. The decision was preempted right after a statement from regulatory authorities in China requiring domestic cryptocurrency exchanges to publish a closing announcement, to cease the registration of new users, and to create a schedule for abolishing the yuan-denominated trading.
The said declaration, however, did not result in the banning of the use of cryptocurrency but the exchange of cryptocurrency. Indeed, it has provoked some to consider whether a legislature may boycott digital forms of money like bitcoin. More vitally, will such a boycott be powerful enough to stop all kinds of cryptocurrency trading?
Government’s Power of Digital Money
Would governments be able to boycott digital forms of money? Completely. The info we should really look into is to what degree a boycott will dishearten those invest in Bitcoin.
There is no denying that legislatures can boycott cryptographic forms of money. Kyrgyzstan, Bangladesh, Bolivia, and Ecuador have officially done such. Russia issued a draft bill to boycott cryptographic forms of money in the year 2014, and late bits of gossip recommend it be officially finalized. Even more extensively, governments have found a way to avoid different other options to their favored monies. As of late, Cambodia proposed that it may boycott the dollar. Syria restricted the utilization of any remote cash in 2013. Also, the U.S. government closed the Liberty Dollar and E-Gold in the mid-2000s.
Advocates of bitcoin stand on their ground that the government cannot truly prevent its use as it is a currency found online — a nom de plume. However, one must realize that monetary demand is subject to network effects. The value of Bitcoin depends essentially on whether other individuals are utilizing it. If one doesn’t trust others will utilize bitcoin, she will be less disposed to acknowledge it herself. Cryptocurrencies that lack non-monetary use means that the demand might fall to zero even if everyone else is more partial to it than the relevant alternative.
By and large, governments may decide the medium of trade by planning convictions, utilizing exchanges strategy, and rebuffing clients of choices. The government, for instance, will be able to make a striking point of convergence around which people can arrange on a specific money by pronouncing an item legal tender. However, a legal tender status may just be an assignment; it does not need to express any special benefits under the law. It just means that people utilize the cash you are utilizing, and you to utilize the cash people utilizing. Saying that the dollar is lawful and bitcoin isn’t legitimate may be sufficient to create coordination on the dollar. As a vast and capable player in the economy, governments are frequently able to give such a point of convergence.
Apparently, the government has the power to stop, or at least decrease, the transactions of cryptocurrencies like Bitcoin. But will they do it? No one knows for sure yet.