An economy is a very important parameter for any country to show its power among other nations. The USA is not just a military superpower; it is also one of the richest countries. Why does everyone question the falling GDP of a country? Because a country needs to have a stable economy. So, Government creates and implements policies along with the Central Banks.
Central Banks are financial organisations with exclusive authority over the creation and distribution of money and credit for a country or a group of countries. The central bank is typically in charge of monetary policy creation and regulation of member banks. These banks work hand in hand with Government to create policies and enforce them in the interest of the common people. Although, history has taught us that these Government Institutions can often become corrupted while losing the trust of the common people. The Sri Lankan Crisis is a prime example. So, the idea of cryptocurrencies that allows the creation of currency which is not controlled by the Government or any particular organisation, feels natural.
It will be extremely challenging for the Central Banks to create monetary policies to regulate the money supply if a cryptocurrency like bitcoin has to become a substantial medium of exchange in the nation. This will result in a country losing its monetary sovereignty. All of the world's leading economies, including India, share this worry. All this said, the Economy is the backbone of any country, and if someone is to play with it, can destabilize the whole structure of a country. So, yeah that source can topple any Government in power.
Additionally, the quick inflow and outflow of cryptocurrencies across borders, and even if they are recognized as crypto assets, Central Banks are concerned about such money fleeing their borders during economic downturns. This money cannot be accounted for easily without knowing the transfer being happening and especially Governments need to balance the inflow and outflow of money for a stable fiat currency on which our whole institution is based. This unchecked flow of Currency deteriorates the value of the fiat currency of that nation which leads to economic slowdowns. Not just that, but the security of the nation is dependent on this flow of money. Many terrorist cells commit financial terrorism which using crypto to collect funds from people by solicitation and later use these funds for terror actions.
Another big concern of the government is tax avoidance through the use of cryptocurrency transactions. It may make it easier for criminal activities in general, such as tax evasion. Along with tax evasion, Bribes can easily be transferred using cryptocurrency because the system is decentralized. Corruption has no boundaries especially if the system doesn’t track the transaction. All that talk about a decentralized system comes with the difficulty for the Government to know what and how much is being transferred. It provides investors with a means of hiding money from tax authorities. As a result, there may be a tax gap, which would cost the government money. The government actually use this money to function and if the government does not collect enough tax, it might need to rely on funding from other institutions which might lead to a similar situation in Sri Lanka.
So, in a retrospect, Crypto does have the power to cripple the policies created by the government but it depends on how the Government incorporates the idea of Crypto in its current financial ecosystem. Although, it is said about books as well which are the most basic tool to change someone’s mind and can create a revolution in minds. Crypto being such a revolutionary technology utilises the mind of people to create an equal society where everyone has access to such financial institutions which our current one doesn’t. So, if one does ask about the dangers of Crypto, it totally depends on how corrupt the user is and how they wish to use the facilities given to them.
While in most scenarios, Crypto is being used by many people for money transfers, even used by people who emigrated from Ukraine during the Russian invasion to have some money at their disposal. Although the government did topple in this crisis Crypto was on the side which helped the people and their government. People are earning money by trading in Cryptocurrencies and they have gotten out of their boring jobs and having fun in their life.
Artists are able to sell their creations while also retaining their rights, unlike Picasso a great painter who lived most of his life in poverty. People have the choice to choose whichever career they want, and Crypto is providing earning potential for them. People are also securing their personal information using blockchain technology used by Crypto, their assets are much safer in here than their lockers. So, what we need to discuss is not how dangerous a
Crypto is but how can each individual and their governments come together to utilise this resource? Because even the nuclear technology was so destructible as seen in Japan, countries came forward and took an initiative to use this resource in a better way and many people have seen the advancements because of nuclear energy. Such advancements by Crypto are not merely a dream but a possible scenario we can see and have a vision about.
Although the bitcoin ecosystem has had setbacks because of scandals, it has the ability to decentralize and alter how the current financial system functions. Bitcoin will continue to arouse mistrust and criticism from existing authorities up to the point at which its ecosystem matures and a major use case for it is discovered.
So, the question does arise is how to incorporate Bitcoin into the financial ecosystem. We might not have a concrete answer for now. What we believe is that a Global Bank of Cryptocurrency regulating a Global ledger could be instantiated to track every transaction that could be recorded and traced by the governments to create a sense of trust which might be lost right now. This might lead to proper accounting of the cash flow creating a synergy between cryptocurrency and the bank-regulated fiat currency. Hence the state might not lose their monetary sovereignty and have a proper check on financial terrorism and flow of the cash. Corrupt practices can also be traced by this system. It does seem like a long shot but it could become a technology full of potential in helping Governments achieve a more equal society.
Governments are sceptical, if not afraid, of Bitcoin and are confused between denouncing it and looking into how it may be used for their purposes. But as we have seen common people and their beautiful minds, we can judge that it is a great possibility that we can put forth to our future generations a Technology and a society where we are not merely dependent on these banks but on ourselves safeguarding our properties, and a nearly Utopian society.
