How Government Has Lost Its Control Of Money With Crypto
Crypto currency is what is also referred to as digital money.
This is due to the fact that it is not based on physical properties but is a virtual currency that is based on computer networks. Unlike conventional currencies, which are minted and printed, crypto currency is mined. Mining refers to the process of generating the currency using algorithms and computer programs. The currency created has unique security features that make use of encryption.
The crypto currency is decentralized in its operations. This means that the currency operates free of the control of central banks. Each currency operates independently on a platform that works on computer networks. For example, Bitcoin and Ethereum are both independent currencies and work on their own platforms. This is different from conventional currencies that are under the control of central banks.
The role of government is to control the supply of currency in the economy through central banks. The role of the central bank extends to controlling the money supply through the use of monetary policies. The central bank works with financial institutions such as banks in limiting the circulation of money in the economy. Central banks are responsible for printing and minting the money that is released into the economy.
The first consideration as to why governments have lost control over money is that crypto is borderless. The government can only exercise authority over its territorial boundaries. Crypto, which is mostly cloud-based, ensures that the government cannot exercise control over its use.
The government has also lost control over crypto by not being able to control its supply. Bitcoin is nearing its limit of generation, which stands at 21 million. It currently stands at 16 million. In this case, the government cannot intervene and extend the limit. This inability to interfere with the generation of crypto currencies means that it does not have control over crypto. The central bank working with commercial banks cannot assist the government to control its supply.
However, there is a way that the government can control crypto. This is far-fetched and might happen in the future. It would involve the government creating its own crypto currency that competes with the current digital currencies. This would in a way force the independent crypto platforms to join together under a platform that would be regulated by the government.
This last reason brings us to the conclusion of this article as to why the government has lost control with crypto currency. The government currently is not able to tax transactions conducted on crypto platforms. This inability to tax crypto is a significant pointer that the government does not have control over crypto.
From the above reasons, it is easy to why the government has lost control over crypto. The facts speak for themselves!