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Since its conception, bitcoin (BTC) has been adopted by countries all over the world. One distinct function of the leading digital currency is serving as a new kind of money that people can utilize in making different kinds of purchases regardless of their geographic locations.
Bitcoin is also correlated with gold due to their notable similarities. Gold is acquired through hard-rock mining, while bitcoin is generated through a digital process called bitcoin mining. Gold is also scarce, which gives it a high market value. Bitcoin, on the other hand, also has a limited supply of just 21,000,000 BTC.
The most interesting characteristic of bitcoin is its decentralized system. It is not operated by the government or any other form of authority. The network is operated by every user in it who uses the same code that adheres to the same self-imposed regulations.
With the growing number of digital currencies available in the market, these previously unconventional payment methods are slowly being accepted and even regulated due to increased use in some parts of the world. However, this characteristic of operating as a new kind of money and an innovative payment system is used by some groups and individuals for a different purpose.
While most holders spend and sell bitcoin and other cryptocurrencies for business, everyday purchases, and investments, there are some who still use it for illegitimate purposes and transactions.Illicit use of bitcoin and other cryptocurrencies
Reports have shown that anonymous groups and sometimes individuals have engaged in illegal business dealings involving cryptocurrencies. Some forms of these illicit transactions include paying for smuggled foreign drugs, money laundering, financing terrorism projects, and other criminal activities.
The rising number of reports and incidents have caused an alarm to the governing bodies of the countries involved. On September 9, 2016, Europol, Interpol, and the Basel Institute on Governance established a tripartite partnership that works on money laundering issues concerning cryptocurrencies.
Last year on January 15 and 16, 2018, the same groups collaborated to hold a workshop designed for financial investigators, which tackled detection, investigation, seizure, and confiscation of cryptocurrencies.
With these reports circulating within the industries of finance and technology, implementations of cryptocurrency bans have been seen left and right, across different parts of the globe.
Bitcoin, along with the other cryptocurrencies, is facing serious, legal restrictions in different nations. There are countries that deem the use of these virtual currencies as legal, but there are also plenty that do not.
The legality or acceptance of these virtual currencies varies from state to state. There are some that allow all kinds of transactions—buying, selling, and trading; some just allow buying and some just selling. There are also those that allow you to buy bitcoin with cash, along with other digital currencies.
However, there are also some countries and states which absolutely do not allow any kind of transaction—not even holding.
The possible effects of barring crypto
There are a growing number of nations that execute cryptocurrency regulations within their borders. But how will prohibition affect these countries and their people?
Before the era of bans and restrictions, regulating cryptocurrencies was one of the major concerns of the government since the beginning. Due to its decentralized nature, transactions are often anonymous and hard to track.
There is a rising number of cryptocurrency adopters today. Banning cryptocurrencies can yield negative results, including the stifling of innovation and increased usage of illegal markets. It was mentioned in The Hindu’s interview with Parag Waknis, a monetary economics professor from the Ambedkar University in Delhi, that, “banning the consumption of a good or service doesn’t really mean that people will stop consuming it. The market for the good or service simply goes underground and becomes hard to attack.”
This statement suggests that the market where these currencies are used will not cease to exist. However, the nation’s authority will either have a hard time or eventually lose track of the transactions that take place.
A number of major technology companies are also making their move into the cryptocurrency game. Most of the time, this is done by creating blockchain startups. Blockchain technology has become very interesting, especially to the people in the tech industry.
The interview with The Hindu mentions that, “if we decide to put a blanket ban on all cryptocurrencies, then our technology entrepreneurs will suddenly lose the incentive to work in the sector.”
It goes on to say, “currencies are the only viable practical application of blockchain technology even though it can be extrapolated to a lot of other sectors.” It’s also stated that the potential rewards coming from blockchain technology are big. Banning cryptocurrencies might suggest losing these possible rewards.The shutdown of crypto exchanges
Currently, there are more than 500 cryptocurrency exchanges that are conducting business across the world. For countries with the largest number of cryptocurrency exchanges, the restrictions may cause a probable cutback in their businesses.
One of the known nations with the biggest group of bitcoin and cryptocurrency miners is China. Reports have mentioned that China, while it is the leading country for bitcoin mining, is still continually intensifying the crackdown on the process.
If a cryptocurrency ban is applied all over the world, the closing of mining operations will limit the amount of generated cryptocurrencies. The production of these virtual currencies will be inadequate, which will also cause a change in price.
Cryptocurrency adoption might have lots of risks, but it cannot be denied that it also brings huge piles of opportunity. Many countries have shown great and desirable results.
A lot of possibilities await cryptocurrency holders around the world. While there are some countries that execute restrictions, there are many that openly welcome the adoption of cryptocurrencies and we suspect more will continue to join the march in the coming years.
(Written by Patch De Leon)