Regulation of the digital currency for the digital age

Victor L. Moore, Staff Writer

 

   Over the past 12 years we have experienced the single most disruptive threat to finance as we know it: the first decentralized cryptocurrency known as  “Bitcoin” took the world by storm, but not without some criticism from individuals and institutions that fear unregulated phenomena. Currency in its purest form is something that is used as a medium of exchange and usually has a tangible and universal value associated with it in some way, like the dollar, the pound, and even India’s rupee.

   Some people criticize the potential illegal activities that could be performed over the internet, and some criticize the possibility of significant losses due to the fact that there isn’t one company that is controlling this currency, so if any technological mishap within the wallet where your cryptocurrency is stored, you will just be operating at a loss. Warren Buffet, the extremely successful investor in 2018 described Bitcoin as probably rat poison squared rat poison.  One would argue that there has been illegal activities transpiring since the beginning of time and more than likely will be happening until the end of time. 

   What  these types of criticism reveal is that people lack comfortability with things that are new, innovative and things that haven’t been proven just yet. With the advent of the internet, there were a host of naysayers and non-believers that didn’t know how cryptocurrency would work, and felt that it was the worst thing in the world. These opinions were based solely on advice from critics of the internet, because they were not sold on the internet’s capabilities. Now we fast forward 37 years, and the internet has a prominent role in many lives around the world. The internet has affected how we do business and communicate with one another. 

   Cryptocurrency has the potential to have the same effect on the world. With features like the immediate and secure transfer of ownership without approval from some big financial institution, all you would need is the other person’s cryptocurrency wallet address. Cryptocurrency technology allows payments to be 100% encrypted and will prevent the leakage of personal information. This is in contrast to now, where when you make purchases with merchants, you’re required to provide credit card information as well as your pin code subjecting you to the possibility of a data breach if that particular merchant’s data has been hacked. Governments are taking notice and have different viewpoints on the matter. El Salvador has accepted crypto as currency and other major economies like the United States have refused to recognize it as a form of legal tender, fearing that without government intermediaries, cryptocurrency could potentially destabilize the current financial infrastructure system.

   Once the government does it’s due diligence, cryptocurrency will become a legal tender here in the United States. Many financial applications are allowing people to buy, sell and trade cryptocurrency and there has already been proposed legislation concerning cryptocurrency. U.S. Federal Reserve Chairman Jerome Powell and S.E.C. Chairman Gary Gensler are concerned about the lack of regulation, Jerome Powell said he does not intend to ban cryptocurrencies, but said stablecoins need greater regulatory oversight. For cryptocurrency to have a future in the United States, it will have to be regulated in some form or fashion, something crypto enthusiasts are not too thrilled about, as the decentralized nature of digital currency is a big draw.