Bitcoin, Cryptocurrencies and Government Regulation
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Bitcoin is now touted to be the newest craze among businessmen and venture capitalists. The market has quickly reached billions of dollars, and now everyone wants to join the craze.
Because of all the attention, the government is now starting to take a closer look at digital currency. Bitcoin is only available on digital platforms, which is very different from how fiat currency operates.
The majority of financial experts and cryptocurrency enthusiasts believe that government action is necessary to help digital currency achieve legitimacy and widespread adoption. However, there are also those who believe that involving the government will make Bitcoin lose its appeal.
But ultimately, at the present, the government is still figuring out what its role will be in the world of cryptocurrencies and digital assets.
Here are three issues that you need to keep your eye on:
Normal people who want to use Bitcoin to pay for goods and services do not need a license to do so, but the requirements are less clear for Bitcoin miners since they are the ones who are responsible for “mining” the Bitcoins in the system. They are also the ones in charge of facilitating and recording the transactions that happen on the Bitcoin network.
It is still unclear what the government plans to do since there are nearly thousands of miners around the world. The miners don’t really get any money from anybody in exchange for their work, so they have no one to report to. It is also because of this that a lot of miners opt to work anonymously.
It could also be argued that Bitcoin is in need of more than one regulating agency to give financial insight since digital currencies are something that is very unique at the moment. Bitcoin can either be a lot of things: it can be considered a currency, it can be considered a commodity because of its finite supply, and it also functions as a payment system all at once, and all of those functions may possibly need separate regulators.
Whatever happens, though, those who will be appointed as regulators should be educated on exactly how Bitcoin operates. If they are unable to understand the thing that they are supposed to regulate, then they might do more harm than good.
The road to regulation may take a while, but as it stands, cryptocurrencies are still a nice way to incorporate long-term investments into your portfolio. Head on over to this trusted and beginner-friendly cryptocurrency exchange platform to help you get started.
There is some speculation going around that by the end of the year, other local governments will be accepting Bitcoin as a method of payment. Where? Experts believe that it may eventually be the high-tech communities of Silicon Valley.
The main attraction here is that the transaction fees for Bitcoin are way lower than credit card transaction fees. The rate at which cryptocurrencies are being regulated at the moment can present Bitcoin as a low-risk proposition to a country or state’s government. It also has the added feature of security since Bitcoin transactions are less prone to fraud, and the technology behind cryptocurrencies would allow governments to process transactions faster.
Soon, cryptocurrencies may also be used as a way to pay employees their salaries. For example, in England, some government officials based in London have started accepting part of their salaries in the form of Brixton pounds, their local equivalent of digital currencies. This was launched back in 2009 as an effort to support and promote local businesses. Brixton pounds can also be used to pay for tax and other local fees.
It is still unsure whether the same applications can be said for Bitcoin, but it may one day be used as an alternative currency to pay salaries.
And if you’re one of the people who believe that cryptocurrencies are the way of the future, then you might want to consider adding them to your investment portfolio.
3. Other Utilities
With all the excitement around digital currencies, it can reaffirm the belief that a lot of people have about Bitcoin’s potential. Right now, it is a disruptive technology that has the potential to be more than just an alternative payment method. It can possibly serve other purposes like another way to register properties. It can also be used as a communication platform that does not have any censorship.
Despite its various potentials, though, the government is still wary about the possibilities of it being used as a tool for money laundering. This prompts the idea that a nation can launch a digital currency of its own in order to establish a “legitimised” virtual currency that is backed by the government. The idea might seem that it might take several more years before it can be possible, but with the current advancement in technology and cryptocurrency regulations, that may not be the case.