The influx of many folks into the cryptocurrency space is notable as it is informed by the promise of direct control, decentralization, and fast transactions, including the massive ROI it offers to its users. This promise has been kept. Who doesn’t want to avoid the control and shenanigans of the banks you have to go through if you kept your money in banks? Fortunately, cryptocurrencies have provided an alternative.
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The forerunner of cryptocurrencies is bitcoin, which a nondescript Satoshi Nakamoto created in 2008. The advent of Bitcoin helped solve the problem of decentralization and eliminated the third-party interest of the banks when making transactions. This gave rise to Peer to Peer (P2P) transactions.
Bitcoin paved the way for other cryptocurrencies, each created to solve different pressing realistic needs like Bitcoin. Ethereum, the second most popular cryptocurrency, was created to solve speed, a significant downside of the bitcoin blockchain. Litecoin was created as an improvement on the Ethereum blockchain to tackle the issue of speed as well. A host of other cryptocurrencies exist to solve real-life problems.
Cryptocurrency’s Estranged Relationship with Governments
The social acceptance of cryptocurrencies worldwide is quite vast. This has led to the decline in the use of fiat currencies like the Dollar, Yen, Euro to conduct transactions. Most crypto adherents see cryptocurrencies as the future of finance. Little wonder, famous critics of Bitcoin — during its early stage– such as Michael Saylor (CEO of MicroStrategy), Jamie Damon (CEO of JP Morgan Chase) have been forced to chew the humble pie both in their words and actions. Recently, MicroStrategy had acquired about 110,000 Bitcoin amounting to 3billion in US dollars. JPMorgan Chase has even had to invest in cryptocurrencies on behalf of its clients, who have been asking how to buy and sell cryptos.
Many people worldwide have been bitten by the crypto bug such that nobody wants to be left out; the crypto tide is sweeping everyone with its raging current.
However, most governments worldwide have remained resolute in their censorious stance against it. This is due to their inability to regulate and control the crypto market. Well, one can say governments now have a piece of their pie”. They cannot control the supply and determine who holds more or who holds more minor. This has caused them to cry wolf about cryptocurrencies. So much that several measures had to be taken to restrict the massive use and adoption of cryptos. A similar point is the decision of the US Government to tax crypto transfers and withdrawals of $10,000 and above in the USA. An even pathetic example is the Nigerian Government’s decision in February this year. The government clamped down on the use of bank accounts for crypto transactions. Thankfully, crypto users in Nigeria have found a way around the restriction.
In what seems like the last resort. Perhaps an abdication of the governments’ futile fight against crypto. Governments plan to set in motion their digital currency referred to as Central Bank Digital Currency (CBDCs). CBDCs are digital representations of fiat currencies, one that they could easily regulate, unlike cryptos. China is already making giant strides in this regard with the Digital Yuan. While the USA and other countries are looking to catch up.
On May 20, 20211, Federal Reserve Board Chair, Jerome H. Powell announced that the US Fed plans to publish a paper in the summer of 2021. This paper will explore the implications of issuing a US central bank digital currency, complement the research already underway.
Russia has even released its version of a cryptocurrency called the Crypto-Ruble, which Vladimir Putin announced in 2017. Russia is looking to conduct sensitive and discreet transactions with Crypto-Ruble. At least, Putin considers it will provide him cover against the prying searchlight and sanctions of the international community. Grapevine has it that Venezuela has been working on a CBDC referred to as the “petro” since 2017; physical stocks of crude oil would back that.
Whether the innovation of CBDCs holds any implication for cryptocurrencies, one cannot say. Would crypto adherents be willing to revert to the CBDCs? Or better still, one should ask. “How do these governments hope to enforce the general use of CBDCs against the massive population of crypto users?” Finally, would the use of CBDCs phase out cryptocurrencies? So many questions, yet few answers.
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Like they say, “Affliction shall not rise a second time”. The massive population of crypto users, mainly comprising the youth, would not be willing to forfeit decentralization and other perks for the centralised nature of the CBDCs. Besides, many cryptocurrencies have found real-life use cases and were created to solve real-life problems. Thus, it will be a tussle for the governments’ CBDCs to phase out cryptocurrencies. Whichever one would win the digital currency tussle (government-backed or socially accepted), only time would tell.
What do you think? Let’s know your view.
Samuel Ikperu is a passionate, enthusiastic but lazy writer and proofreader with interests that cut across politics, fashion, sports, lifestyle and health.
He hopes to move the world with his pen and writing nous.
He also has interests in music and poetry and networking marketing.
Till today am not clear if crypto-currency is legal in our country Nigeria.I have gotten answers from friends but it still seems to be hard to understand if crypto-currency isn’t legal in Nigeria and why.
Till today am not clear if crypto-currency is legal in our country Nigeria. I have gotten answers from friends, but it still seems to be hard to understand if crypto-currency isn’t legal in Nigeria and why.