It’s no wonder all online-based companies and currencies have good promise. More people have spent time on the internet since 2018. The number has reached more than half of the global population. The record high for the number of people online for 2021 is at 4.66 billion.
Bitcoin has seen some extreme fluctuations since 2017. Its lowest point was some time in early 2018. By the late quarter of 2019, bitcoin has seen a steady increase. The rise in value is attributable to both the migration of employees from offices to their homes.
Wall Street has backed bitcoin, now with its value at $4000. Bernstein Research co-head Fraser-Jenkin says that bitcoin can positively assist economies. Cryptocurrency will function as a potential countermeasure to inflation. He advises investors to take note of the increase in gold, too. He predicts bitcoin will have the same average monthly returns.
A word of warning is present for investors. Governments are more likely to implement policies that may hinder bitcoin growth. Ray Dalio from Bridgewater Associates says governments will control resources. This includes their agenda to control cryptocurrency. The same thing happened 80 years ago – the US government banned possession of gold in the 1930s.
Online payment giant Paypal already has support for cryptocurrency. The company announced its support for digital currency on the last day of March. Supported cryptocurrencies include Ethereum, Bitcoin, and Litecoin.
It’s not only payment platforms offering their services to include cryptocurrency. Facebook also joined the trend with a rebranded cryptocurrency. Formerly known as Libra, Diem will find its way to Facebook’s system sometime this year. Facebook partnered up with Novi in supporting the digital currency. Threats against bitcoin exist as policymakers point out issues over money laundering. Facebook asks for approval from the US government. The company cites the efforts put into making a digital currency possible.
While Facebook is making efforts to establish a system, China already has cryptocurrency. The Chinese government has placed its mining centers in Inner Mongolia. The geography of some of the places in Mongolia has several benefits. The climate is ideal for housing massive hardware computing systems. Production of electricity is also cheaper.
The Chinese government faced some criticism for its failure to meet the criteria. Out of 30 areas under review, Inner Mongolia failed its target last 2019. For two years, it remained untouched until the government announced plans of suspension. The suspension includes new bitcoin mining attempts.
Cryptocurrency thrived during the pandemic this year. Back when Bitcoin rates hit their highest in the US, South Korean workers invested heavily. A third of the working class was putting their money into blockchain technology. The investments went to companies like Ethereum and Bitcoin. South Korea also has its own cryptocurrency called the S-coin. Out of fear of money laundering, the South Korean government passed a bill to control bitcoin.
On the extreme side of things, governments will not allow cryptocurrency to exist. The reason why is because the currency is a form of control over a country. Fiat currency is how a government impacts the economy without using real resources. Fiat currency has no real basis and only has value as long as the government deems it so. The government also uses this as a method to work with centralized banks. Cryptocurrency ruins the concept of a fiat currency since it’s virtual and verifiable.
Crypto investors and a number of youth identify trade relations to the North as a potential risk. North Korea has been developing and publicly announcing its nuclear weapons programs. South Korea recently became North Korea’s biggest trading partner. The use of decentralized currency slows down the influx of resources to the north. The cryptocurrency becomes a pseudo-nuclear deterrent.
While the government is keen on banning cryptocurrency, the effects could be the opposite. Saifedean Ammous explains the ban could boost people’s interest in cryptocurrency. Ammous is the author of a book about bitcoin. While cryptocurrency provides financial freedom for individuals, the system still has its flaws. Cryptocurrency may bleed the country dry if it’s mismanaged. One way governments can compete with bitcoin is if they change monetary policies. Reverting back to gold-based standards is also an option. Formulating a system better than bitcoin will eventually kill people’s interest in crypto.
South Korea’s early adoption of bitcoin may become the model for the whole world to follow. Cryptocurrency in South Korea is in a love-war relationship with banks. Some cryptocurrency platforms have already shut down. The halt is due to difficulties forming partnerships with local banks. Cryptocurrency trading platforms in Korea are also known as VASPs. VASP’s are legally required by the Financial Services Commission to undertake extra steps. They’re required to advise crypto users to link personal bank accounts. This additional verification doesn’t appeal to some cryptocurrency enthusiasts. The partnerships go against the concept of purely decentralized banking.
Cryptocurrency investors in Finland might enjoy its perks. The Finnish government has given Bitcoin a VAT exempt status. This happened despite its categorization as a financial service. There are other countries following this trend. This includes Belgium and the UK, although the latter has certain tax regulations. Depending on its usage, cryptocurrency has different taxations in Germany.