Limits of effective control and regulation of Bitcoin
No matter how hard the government tries to influence cryptocurrency, achieving maximum control will take some time. The notable challenges include;
One of the best ways to speed up Bitcoin’s global adoption is by introducing various government policies to make it more secure. People need to be sure they won’t lose their assets to hackers who can break into the network and steal funds. Additionally, inspiring and expert investors want assurance that there won’t be a turning back to a fiat money-based economy.
Unless the respective governments worldwide address the concerns, a fully electronic cash economy might remain a dream forever. But we aren’t saying that governments and relevant authorities across the globe have turned a blind eye to the challenges Bitcoin users face. Countries like China once tried to push cryptocurrencies out of their borders.
The Asian nation, the world’s second-largest economy after the United States, introduced rules banning Bitcoin mining. The two main reasons behind the move were minimizing associated crimes and lowering electricity consumption. But that wasn’t enough. China went into records for being the first country to deport cryptocurrency traders and miners.
And this leads us to the big question. Did China succeed in driving Bitcoin and other cryptos out of its financial ecosystem? Well, the answer is a NO! So, it means there are several drawbacks facing Bitcoin regulatory efforts around the globe. Here are some of the most notable ones.
The Need to Protect Innovation
Bitcoin’s underlying platform, the blockchain, was the first success of its kind. At first, tech experts used blockchain technology only in Bitcoin operations. However, they later began exploiting additional capabilities, which was impressive. For example, many other cryptocurrencies that emerged later also use the same technology.
The blockchain represents a revolutionary concept that has made many things possible. Through advanced coding, software engineers created more reliable security features. These mechanisms helped to curb online vices such as theft of personal data and funds. Moreover, the blockchain platform facilitates the creation of more digital assets, including the Non-Fungible Tokens (NFTs).
People develop games and other applications on the Ethereum blockchain that make work easier in various industries around the world. Blockchain-based smart contracts also eliminate the need for employees, thus keeping operational costs down.
Databases based on the blockchain platform integrate with other platforms easily. And this facilitates a seamless transfer of data between agencies conducting research in the health and other sectors. Therefore, governments have been trying not to over-regulate Bitcoin to encourage the development and advancement of its associated technologies.
Bitcoin’s Decentralized Operations
Bitcoin’s decentralization makes it difficult for the government to control its usage. Its network doesn’t rely on a single designated computer but on numerous independent machines worldwide. And this means that shutting down one computer on the Bitcoin network doesn’t interfere with the rest.
So, if one government bans Bitcoin, people can still access the network through platforms like Bitcoin Motion. The platforms will still run as usual because they’ll be using computers in other locations. Interestingly, removing decentralization can make Bitcoin less efficient, and its value will drop drastically. Therefore, decentralized operations are a challenge that governments will keep battling if at all they want cryptocurrency to prosper.
Lack of Uniformity in Bitcoin’s Control
Controlling BTC will remain a problem provided countries will keep designing the regulation policies independently. For example, all the countries in the world are yet to declare their stand on Bitcoin. Only one nation has so far endorsed BTC as a legal contract. So, the rest of the world still speaks different languages regarding cryptocurrency regulation.
The Bottom Line
No matter how hard the government tries to influence cryptocurrency, achieving maximum control will take some time. Perhaps, no government will ever make such an accomplishment. Some critical limitations they currently face include the urge to protect innovation, the lack of universal laws governing the sector worldwide, and Bitcoin’s decentralization.