Bitcoin has become the new buzzword among the digital financial markets since its price increased by 220% this year.
One of the striking features which makes it unique from the conventional currency is that it is decentralized. Bitcoin is neither backed nor managed by any central institutions like banks. It is managed and recorded on a blockchain network. The network assures that the transaction is transparent and secured.
As Bitcoin started getting popular, regulatory authorities of countries all across the world seemed to be confused in handling it. Some countries legalized it while others made Bitcoin illegal. While some others restricted and regulated the crypto markets in their country.
Should Bitcoin Be Legalized? | Should Bitcoin Be Illegalised?
After reading about the lucrative profits associated with Bitcoins, are you thinking to buy some of them? I would first recommend you to check the status of cryptocurrency in your country.
If Bitcoin Is Legalised!
Most of the fiat currencies are evaluated based on the behavior of the US dollar, rates of crude oil, and the social and political conditions of the country. Amid the chaotic financial environment and the pandemic situation, some of the countries decided to legalize the controversial Bitcoin.
More than 100 countries (till 2020) including Japan, Singapore, Switzerland, Malta had recognized the status of Bitcoin and legalized it.
As reported by many of the nations, legalizing Bitcoin would help them to revolutionize the financial system. Let us find how!
- Smooth Cross Border Transaction: Less transaction time and lower transaction fees -results in a smooth cross border transaction of Bitcoins. Many of the nations advocated that they just need to strengthen their digital infrastructure to easily send and receive crypto across the country or world.
- Counterfeiting: Counterfeiting of fiat currency is one of the major issues faced by most nations. This further results in more intensive problems like financial terrorism, cross-border illicit activities, etc. Bitcoin is immutable and thus can be treated as the solution against the issue of counterfeit fiat currency. Each transaction of crypto is recorded on the blockchain. Any alteration in the transaction is being informed to all the nodes or systems involved within that particular block of transaction. Thus, duping the whole system is highly impossible.
- Privacy: When the transaction takes place on a blockchain network, the identity of both sender and receiver remains completely anonymous. Only the wallet addresses(a combination of random numbers and alphabets) are being shared between them. Thus, privacy can be assured when people transact in crypto coins.
- Security: Bitcoin transactions are secured by following cryptographic techniques. The information related to the transaction amount, wallet addresses, and other data which need to be filled during the transaction, all remains encrypted. Cryptography ensures that the network is secured and thereby safeguard the money from getting stolen.
- Infrastructure: Bitcoin follows a decentralized model based on blockchain technology. All the transactions are verified by the participants or miners on their systems connected to this network, and the transaction gets completed. Thus, cryptos need not be minted and stored up in bank lockers. There is barely a need to set up the huge physical infrastructure or maintain the manpower for crypto transactions.
Many of the nations legalized digital currency to enhance the experience of their citizens.
If Bitcoin Is illegalized!
Bitcoins are still seen as the doubtful currency in many of the nations. Even in some of the nations, you might be imprisoned if you withhold the coins or are involved in the transaction of cryptocurrency.
While in some others, the government authorities ended up making it illegal. Saudi Arabia, Algeria, Vietnam, Qatar, and many more countries banned Bitcoins due to one or the other reasons as stated below:
- The decentralized nature of cryptocurrency makes the government skeptical and made them feel like losing control over the financial system. Besides the concern of the security of citizens, authorities are also concerned about the notorious crypto exchanges involved in promoting a decentralized payment structure.
- Semi anonymous behavior of the Bitcoin transaction is a big question mark to many governments. Anonymity in transactions can result in money laundering, tax evasion, and giving birth to a haven for black markets, as per the nations who banned the digital currency.
- Tax evasion is also one of the main bones of contention for the authorities. The transaction path of crypto can be traced but not the amount which is being transacted, which can result in evading the taxes. This can ultimately create difficulty for the legal and financial systems of the nation.
- Money can be laundered easily with the help of cryptocurrency or Bitcoin. A person needs two crypto accounts to launder the money, and the transfer looks perfectly legitimate. The lack of central authority, proper regulations, and anonymity can help in easy evasion.
But even after all the problems, making the currency completely illegal deprives the countries of utilizing the potential benefits of the cryptocurrency.
Thus, if a nation can partially legalize Bitcoin, then the whole financial system might operate in a hassle-free manner.
Making crypto either completely legalized or completely illegalized might be difficult for most of the nations. Thus, some of the countries have found the middle path of introducing crypto in their country.
Most of the nations are seeking to utilize the potential benefits of the cryptocurrency while providing the structure to safeguard investors. Nations like the United States of America, countries of the European Union, Egypt, Indonesia, and many more have restricted the environment for BTC but did not outrightly illegalize Bitcoin.
Most of the countries are constantly strengthening their digital payment infrastructure and creating a favorable environment for Bitcoin transactions. They are making sure that BTC transactions are following the rules related to anti-money laundering, tax evasion, and financing terrorism.
Predicting the future of Bitcoin might be difficult at this moment of economic slowdown. So, think before you invest!