Are you wondering why banks and governments fear Bitcoin? Here is a complete explanation of why banks fear this digital currency.
Countries like El Salvador declared that Bitcoin was a legal tender, while other countries do not want anything to do with this digital currency. Bitcoin is a digital currency that can be transferred from one person’s account to another account without the interference of intermediaries. As a result, this digital currency is entirely decentralized, which is why people can transfer it without the help of any central bank.
On top of that, China, one of the fastest-growing economies, has wholly banned cryptocurrencies in their country. Here is why some governments and banks fear this virtual currency.
Decentralization
Conventional currency is entirely centralized, meaning that the government has the power to control them. The government can alter the financial policy to run the economy and control how the public spends money. Moreover, the government can track criminal activities that individuals may carry out with traditional currencies. As a result, the government’s control of fiat currencies gives them the power to influence the economy.
However, with the introduction of Bitcoin, the government and banks have lost control over currencies. That’s because Bitcoin is a decentralized currency with an underlying technology that does not allow any government to regulate monetary policy.
In the end, some governments do not want to lose control over currencies because they cannot track down illegal activities that individuals will carry out with the cryptocurrency. Therefore, some economies fear this virtual currency.
Bitcoin is Still Young
Bitcoin is a very volatile cryptocurrency that has only been available for over a decade. However, fiat currency has been around for longer, and its value is stable. Most of the le do not trust the concept of Bitcoin due to the unstable value of this virtual currency. As a result, some governments still fear this digital currency because they think it could technically be breakable.
Bitcoin does not have a bad design, but people believe that software is very vulnerable. This digital currency is decentralized and has the advantage of anonymity, making it an ideal platform for criminal activities such as money laundering.
Complex Financial Treatment
Bitcoin uses blockchain technology to create a decentralized network making its monetary treatment very complex. Therefore, many governments have a hard time thinking of ways to plan their tax regulations and economic policies. In the end, governments find it hard to understand how they will collect taxes when they adopt this electronic currency.
Increased Adoption of Bitcoin
Bitcoin is among the top cryptocurrencies, and its value has increased remarkably. As a result, many people and business owners are using this virtual currency to complete transactions. Popular exchanges such as have continued to register more users. These trading platforms like https://bitalphaai.me allow Bitcoin users to buy and trade this digital currency with fiat cash.
However, the increased adoption and interest in this virtual currency is why governments and banks fear Bitcoin. The more the public uses Bitcoin as a store of value and medium of exchange, the more the banks and governments lose control over the financial systems. Additionally, hackers can easily target this digital currency because they know that users will not have any other option if they lose all their Bitcoins.
Crime Concerns
Some government agencies argue that Bitcoin’s decentralization and anonymity encourage cyber crimes. That’s because criminals can hide behind it to steal money from users.
Conclusion
Some people believe that Bitcoin is the future of money due to its increasing adoption. Its innovative technology is already affecting several economic sectors, including finance. However, governments and banks worry that its decentralization and anonymity might interfere with the existing systems. Thus, they fear its adoption and usage by the citizens.
