7 reasons why countries should legalize cryptocurrencies

|October 30, 2017 0
Image courtesy of Sira Anamwong at freedigitalphotos.net

Vishal Gupta

Bitcoin’s popularity and surge in usage has not been without cons. However, some countries took it upon themselves to ban the new age currency.

For example, in Vietnam, Bitcoin can be used freely by citizens but credit institutions have been warned about the usage of Bitcoin, as early as 2014.

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In Iceland, the legality of Bitcoin in Iceland is a bit tenuous. Mining Bitcoin in the country is legal and so is transacting in it. However, Bitcoins cannot be purchased from a foreign exchange.

El Banco Central de Bolivia officially banned any and all currencies not backed by a government, especially naming Bitcoin in May 2014.

Ecuador banned all forms of cryptocurrency, but established guidelines for its own virtual currency.

The National Bank of Kyrgyz Republic bans any form of cryptocurrency as legal tender. However, no law prevents users from buying or selling.

Transacting in any kind of cryptocurrency is liable to earn a 12 year term in prison in Bangladesh. This law has been in place, since September 2014.

However, this technological disruption has transformed the currency market irreversibly and for the reasons given below, it’s important that cryptocurrencies be made legal.

Blockchain – Decentralized book-keeping

Cryptocurrencies are transparent because the transactions take place on the public blockchain ledger. Transactions are approved and verified by nodes before they get carried forward. This rules out scope for financial malfeasance or fraud. Besides being finite, cryptocurrency cannot be hacked or diluted, as the decentralized ledger cannot be altered once an entry has been made. The finitude of the currency and its robustness only serves to increase its value.

Cryptocurrency market’s capacity for growth

Cryptocurrency is a newfound haven in an era where government backed currencies do not offer the promise of safe investment. The market cap for cryptocurrency is presently pegged at $120 billion, at the time of writing this article. With the advent of Bitcash, this value is only expected to go much higher north.

Deeming cryptocurrencies as securities

Securities and Exchange Commission(SEC) has recently listed cryptocurrencies as securities, requiring the owners of cryptocurrencies to pay capital gains as they would have if they had invested in securities. This regulation of cryptocurrencies is a measure towards legitimizing it, helping it ensure a long term future. This also means cryptocurrencies have the promise of returns.

Gold investors shifting to cryptocurrencies

Long considered a safe investment haven, gold is fast losing its position to cryptocurrencies. Mike Maloney, founder of GoldSilver.com has encouraged investment in Bitcoin as a failsafe from market instability and unforeseen economic uncertainty. Following this, many prominent investors are slowly increasing their stakes in various crypto currencies across the world. Mainstream media analysts have emphasized that Bitcoin is witnessing demand as gold investors are now flocking to this newfound investment haven.

Blockchain assets to be accepted as collateral

If not for all cryptocurrencies, atleast the top 3 cryptocurrencies (Bitcoin, Ethereum and Bitcoin Cash) will be accepted as collateral by private lenders who would be accepting blockchain assets. This puts blockchain assets on the same scale as real estate or gold, as a form of collateral. And, cryptocurrencies are easy to store, inexpensive to transfer and liquidate.

Altcoin technologies will grow faster than expected

Bitcoin is continuously evolving and will continue to do so in the times ahead, and so is true for Ethereum, which is also evolving fast. On the other hand, newer currencies like NEO and Golem have a technological basis for their value, but are being developed at a farfetched pace. This makes their price low and their potential upside great. Not all the coins on the market will succeed, but some will.

Developed countries are paving the way for the Blockchain revolution

Recently, Japan passed a law that brought bitcoin exchanges under anti-money laundering purview and last month, the US Bitcoin Exchange surpassed Japan to become the world’s largest Bitcoin exchange market. Major European retailer Alza has begun accepting Bitcoin and installing Bitcoin ATMs in its outlets in Prague and Bratislava. Germany has found Bitcoin to be the preferred form of payment and Bitcoin based ATMs are on the rise across Europe and the USA.

As countries pass more and more laws legalizing and regularizing cryptocurrencies, it would be unwise to let go of this economic opportunity by sticking to old bans and prejudices. Cryptocurrency isn’t just a onetime phenomenon, it’s now a movement that cannot be ignored.

The author is Chief Architect, Internetdollars.org and Co-founder Digital Assets and Blockchain Foundation of India(DABFI).

(The views expressed are solely of the author and CIOL.com does not necessarily subscribe to it.)

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