Governments all over the world get scared whenever they are faced with a phenomenon that is beyond their control. Cryptocurrency is a symbol of total financial liberation from government-issued fiat currencies. The anonymity offered by Cryptos will limit the ability of government to collect tax and that accounts for its number one fear. Using Bitcoin as a basis, being a user-powered peer to peer decentralized payment system is sending shivers down the spine of big governments. Even the United States Security and Exchange Commission already confirmed the fears of government by issuing a warning against ICOs.
A World Without Taxation
No government can function effectively without access to tax from citizens. With these citizens resorting to an alternative currency, it will become difficult for the government to track your income. However, with fiat currency in place, governments have easy access to your financial reports, credit reports and know what you earn and what you will pay as tax. Cryptocurrencies are not meant to subvert government regulations but the decentralized nature of the Blockchain technology is putting the government on it toes.
Business Without Fiat Currencies
Fiat currencies will always be relevant, they will function as a form of value estimation with Cryptocurrencies. The acceptability of Cryptos is growing at an atomic pace, it will get to point where people will realize business can be done without the intervention of government. Which is a horror governments do not want to ever accept. This was what necessitated the clampdown by the Chinese government recently. In the US, the SEC was quick to scare people away from Initial Coin Offering (ICO). Despite the efforts of government, the volume of funds that have been raised through ICO is convincing enough. Interestingly, government effort to regulate ICOs has served as a free advertisement as ICO’s are global, untraceable, decentralized and funds raised cannot be frozen.
Claim of Funding Crime
Despite handing the people with freedom, Cryptos will limit the liberty of people. Due to it’s untraceable nature, Cryptos can become a means to fund crime and even terrorism. This serves as the only justifiable argument by the government. The ability to move money through untraceable ways can serve as pipeline funding for prostitution, money laundering, drug trafficking and other illegal activities.
What Can the Government Do?
There are two options available to governments.
- Shut Down the Internet
- Infest Computers and Routers With Malware For Tracking.
You think it’s not possible? Yes, it is, and some governments are already doing it. The Chinese government is already regulating Bitcoin exchanges in China. During elections in third world countries, government shut down the internet to prevent access to the outside world. That is what governments might later resort to with the rate at which Blockchain technology is changing the face of finance.