Cryptocurrencies were created to be used in the exchange of goods or services. They emerged from the financial crisis in 2008 as a solution to internet operations, but today both electronic companies and companies such as Reeds Jewelers, Starbucks, Virgin Galactic, and Burger King Germany accept this type of currency as a form of payment.
The disproportionate increase in the use of cryptocurrencies has caused some countries to believe that it is necessary to regulate their use, despite their disadvantages and lousy importance. This is because it is considered that Bitcoin as the new Gold.
Influential countries in cryptographic use and application
In El Salvador, the decree that will make the country the first in the world to convert Bitcoin into a national currency has already entered into force. The central bank of Cuba also promulgated that it will legalize cryptocurrencies due to the increase in their application and use in trade.
Finally, Venezuela is one of the first countries to develop and implement its cryptocurrency, called Petro, which did not have the expected acceptance and use since its support base, oil, fell in its value.
The development and implementation of this technology came in a hurry, but its regulation did not; the United States has not yet defined any law regarding their use. However, developed countries can be exact and effective in establishing legislation, an aspect that developed countries do not have, which carries significant possibilities with many risks.
Venezuela and Cuba are under pressure from economic and financial sanctions issued by the United States. As a result, the Venezuelan government cannot dispose of the nation’s assets in North America.
These sanctions also decrease Cuba’s participation in international trade. That is why they implemented cryptocurrencies since through them; the island would possibly slightly evade some details of the blockade.
Anti-Western or anti-democratic policies and activities induce citizens to create independence and autonomy over their finances. The communist government of Vietnam and China followed the example of Venezuela, declaring that it would make its pilot cryptocurrency to curb the disproportionate increase in the use of globally recognized cryptocurrencies.
Uses that governments are interested to obtain benefits
During 2019 and 2020, the use of cryptocurrencies increased by 880% worldwide. However, this increase occurred mainly in developed countries, in which there is no good credibility in the authorities and banking institutions, and their physical currency is constantly devalued.
In Latin America, cryptocurrencies are beneficial to receive resources quickly, issued by relatives who emigrated and work abroad, turning the legal system around and avoiding high commission payments, an aspect that governments do not let go unnoticed and seek how to profit from this strategy.
At the global level, regulation and control policies seem inescapable. In general, it seems necessary to offer a regulatory framework on cryptocurrencies that preserves consumer protection and establishes the precise rules to interact in this new and complicated market.
Before proceeding with the regulation of this market, many aspects must be taken into account to establish arguments that provide legal certainty, profitability, and financial stability without directly affecting the very nature of the cryptocurrency market and the development and technological growth and economy.
Cryptocurrencies have become the means of exchange par excellence in all businesses worldwide, which has caused them to become involved in illicit activities; this has led to the creation of government policies and laws that want to avoid misuse of these cryptocurrencies.
By making this a reality, cryptocurrencies would be losing their main characteristic, which is decentralization together with financial freedom, which would cause many users to abandon this project, feeling cheated, since, with virtual currencies, we are the ones who decide on our capitals, about how, when and where to invest and use them.
Regulation policies at the global level will benefit many and disadvantageous consequences for others, with users, investors, and institutions that operate legally and without consciously violating the laws being more affected.
We must accept the changes of these cryptographic markets and try to study to understand their behavior better and be aware of the risks and benefits that are obtained if you are part of it; cryptocurrencies can allow us to grow unimaginably in what economic but in the same way we can lose everything in an unexpected moment where a fall in its values is registered.