Why Governments and Banks Are Afraid of Bitcoin
Bitcoin claims that it is the first decentralized cryptocurrency in the world operatedby its users without a central authority or an intermediary. This lack of central authority is the main reason of governments fear.
To understand this fear, it is important to know a little about governments and traditional currencies. What do we trust? Fiat is a term used to describe the traditional currency issued by governments. Fiat currency is valuable because governments say so.
For a growing number of people, this promise means nothing. After all, Fiat currency is not backed by any tangible assets. You cannot exchange the government for gold or silver bars, bean waste, packs of cigarettes or anything else that may be valuable to you.
The Fiat currency is backed by the full confidence and credibility of the government that issued them and nothing more. If you want gold, silver, beans or smoke, you need to take your Fiat currency with a person or entity that owns the item you want.
Why Control Matters
Governments control the currencies of the world. To maximize economic impact, they use central banks to issue or eliminate thin air financing, which seeks to increase economic impact. They also decide how to move currency currencies, enabling them to track the movement of the currency, who can benefit from the movement, collect taxes on it and criminalize it.
Can detect All this control ends when NGOs make their own currency. Currency control has many negative effects, especially for a country's fiscal policy, business environment and crime control efforts. Although each of these topics is wide and complete enough to fill the volume, a general overview is sufficient to provide insights into the general concept.
Fiscal Policy
While the potential for crime draws people’s attention, the role of currency in a country’s monetary policy can have a much bigger impact. Governments deliberately increase or limit the amount of money in the economy to stimulate investment and spending, create jobs or avoid uncontrolled inflation and recession, so currency control is a major concern.
The Business of Bitcoin
Bitcoin users do not need an existing banking system. Currencies are created in cyberspace the "miners" use their powerful computer to solve complex algorithms that serve as controls of bitcoin transactions.
Their reward is payment with cyber currency, which is stored digitally and transmitted between buyers and sellers without the need for an intermediary. On a smaller scale, airlines reward miles in a similar way, allowing travelers to use airline miles as virtual currency for airline tickets, hotel rooms and other items.
If Bitcoin or some other cryptocurrency is widely adopted, the whole banking system may become useless. While this may seem like a wonderful concept considering the recent banking industry behavior, there are two sides to every story. Without banks, who do you call when your mortgage payment is hacked? How do you earn interest on your savings? Who will provide assistance in case of asset transfer failure or technical problem?
While the financial crisis has given bankers an even worse reputation than they already have, there is something to be said for organizations that oversee timely, efficient and reliable asset transfers and the record keeping associated with them. There is also the issue of the fees that banks charge for the services they provide. These fees generate a lot of revenue and a lot of jobs in the global banking industry. Without banks, these jobs would disappear, as would the tax revenue accrued by these banks and the payments of their employees. Money transfer business will also disappear in the virtual world. No one needs Western Union or its competitors if everyone is using Bitcoin.
Crime Concerns
The untraceable financial transactions facilitate crime which is enough to recap the issue by stating that. Prostitution, Drug trafficking, money laundering, tax evasion, terrorism, and other illegal and destructive activities all benefit from the possibility of sending money in undetectable ways. A good example is the Silk Road Online Drug Market, which is currently non-functional. Its founder acknowledges the success of Bitcoin.
The Other Side of the Bitcoin
Aside from the fact that virtual currencies can be used and used in large-scale illegal activities (it should be noted that cash is used for many of these transactions), there is a legitimacy in their favor. There is a theoretical argument.
Use This is based on the fact that the weak central bank in the money supply led to a recession, increased unemployment and created a profitable and corrupt global banking system. We just need to see why the mortgage market will look at the 2009 financial crisis and why unsuccessful customers everywhere will support efforts to change the system of in
