07
Dec
2020

How National Sovereignties Are Being Challenged By Bitcoin Like Never Before

Introduction

Nations are powerful entities. They have at their disposal the unmitigated power of laws, regulations, and enforcement. At every juncture, it is their duty to improve, protect, and defend the life of their citizens in the social, cultural, economic, or political realms.

However, nations are not abstract entities. They are represented by governments and human beings are driven by their own interpretation and imagination of what is best for the countrymen and also their own interests.

The holders of power are critical to any form of dissent or challenge, which seems to be addressed to question their supremacy and unbridled authority.

In this article, we are going to look at why nations are critical of Bitcoin and cryptocurrencies and view them as threats to their sovereignty.

Bitcoins: Meaning and Definition

Let us first look at the entire concept behind cryptocurrencies. Bitcoins are digital currencies, which are decentralized and exist on a public distributed ledger.

They are ‘internet money’, which comes into existence when miners solve complex mathematical equations and verify transactions on the Bitcoin transaction network. This is referred to as Blockchain.

Bitcoin is not controllable by central authorities and other institutional bodies like Central Banks. It works on a peer-to-peer network and removes the concept of middlemen in financial transactions.

Authenticity and credibility are built into the public distribution system and every transaction requires to be verified by all the computers on the system. a central regulator does not control the transactions.

The removal of huge banking transactions and commissions make Bitcoin or any other cryptocurrency a valuable attraction for users.

Is Bitcoin a Real and Credible Threat to a Nation’s Sovereignty?

Nations look to ensure compliance from their citizens. It is all based on the philosophy that if the rules and regulations are not adhered to, it will lead to the development of an anarchic society.

Nations and governments want to control and dominate the lives of their citizens. They do this majorly through monetary policies. Taxations, fines, civil lawsuits, and raids are the ways they want you to have and maintain respect for the law.

When it comes to Bitcoins, all these regulations go out of the window. As Bitcoins are not something given to normal people by the government or have any regulations, they are completely free from their control. This is quite an unfamiliar area for many nations to address.

The first intention of modern governments to the rise of cryptocurrencies had been indifference. However, the recent surge in popularity levels has forced them to go for stern measures like blanket bans. Rather than engaging with the new technology, they feel that it is a threat to their dominance.

What should Nations do to Regulate Cryptocurrencies in 2021?

The high profits and returns from platforms like the Bit Signal are forcing citizens in different countries to start engaging with crypto trading and investing in a major way. Some governments have tried to use the opportunity and benefit from the emerging industry.

For example, countries like Japan, Australia, Germany, and Canada have embraced the positives of cryptocurrencies like Bitcoin. They have even dictated central banks to start offering crypto solutions as a specialized banking activity.

Countries like the US has been ambivalent in its approach. It has continued to play the waiting game even when adversaries like China have made massive strides into digital currencies. In the United States, cryptocurrencies are taxed like properties and real estate for Capital Tax Gains.

Other countries, which have been too stern in dealing with cryptocurrencies are India, Pakistan, and Nepal. While India’s Supreme Court recently overturned the Central Bank’s ban on crypto trading and investing, there is still a long way to go in terms of proper governmental engagement.

The Bottom Line

The pandemic has acted as a catalyst when it has come to increasing the popularity of digital currencies. Rising bank rates, extra charges, and commissions are being noticed by people and businesses very keenly.

Their attraction towards Bitcoin is stemming from the high personal taxations and astronomical charges being leveled on their incomes by banks and governments. With the promise of a borderless financial world around the corner thanks to Bitcoins, it is time governments start engaging with the same in a much more professional manner.

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