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Satoshi Nakamoto invented Bitcoin as a peer-to-peer network that allows users to conduct transactions without outside intervention. This is still the case, but regulators have consistently raised concerns that cryptocurrencies are facilitating criminal activities such as money laundering and terrorist financing. Hence, they propose new guidelines to monitor and control the crypto market to protect users from such risks. However, Bitcoin’s proponents also insist that regulation would significantly hinder its intended uses as a decentralized currency.
Financial regulators, experts and academics continue to disagree on whether or not Bitcoin should be subject to government regulations. For this reason, however, governments shouldn’t regulate Bitcoin.
Restricting access to capital
Fiat currencies are subject to government regulations, meaning the government controls their use. The main disadvantage of such a system is that it only benefits the wealthy and powerful people who influence the government. And this leaves the majority desperate, forcing them to either bribe or appease the institutions in order to conduct transactions.
The decentralization of Bitcoin allows anyone with a smartphone and an internet connection to join the network and make transactions. Users can use crypto exchanges such as B. Send and receive money, trade and invest in Bitcoin https://ethereum-trader.app/ without government or institutional intervention. Therefore, regulating Bitcoin would severely restrict this freedom and restrict access to capital.
Contain financial inclusion
Bitcoin promotes financial inclusion as users don’t need bank accounts or third parties to carry out transactions. Plus, Bitcoin users don’t rely on money processors to send and receive money around the world. This enables seamless cross-border transactions without outside interference, so that even the unbanked population can do business with the rest of the world.
Imposing government regulations on Bitcoin would significantly hinder financial inclusion and limit its use. These regulations could mean that users have to go through a central authority for transactions. Besides, it would also limit the volume of Bitcoin transactions, which makes it extremely difficult for most people to trade with the rest of the world.
Dwindling confidence in financial transactions
Although state regulations vary from one jurisdiction to another, they also share some similarities. For example, fiat currency transactions must involve third parties such as banks and money processors. This has been the basis of trade in most of the world, but it also undermines trust due to the many actors involved.
Bitcoin transactions take place exclusively on a blockchain, with no intermediaries. It validates users’ addresses and transaction details in a permanent public ledger and provides greater transparency and accountability on financial transactions as the catalog is irreversible.
Regulating Bitcoin would allow third parties to participate in transactions, increasing the risk of compromise. Many institutions would abuse this authority and use their regulatory powers to manipulate Bitcoin transactions and compromise users’ data. Government regulations would severely undermine the element of transparency in Bitcoin transactions and expose users to multiple financial risks.
Higher transaction fees
The absence of third parties in Bitcoin transactions is one of the reasons for the lower fees. Bitcoin limits the transfer to only the two parties involved; Sender and recipient. As a result, government regulations would impose multiple actors in the various phases of the transaction, each requiring a reduction in transaction amounts. This would significantly increase transaction fees, which would put a significant financial burden on Bitcoin users.
While Bitcoin regulation may seem so good, it would immensely jeopardize its application as a decentralized currency. These regulations would adversely affect individuals and companies who already use Bitcoin and affect a less trustworthy, restrictive, and costly financial system. Government regulations would also hinder global financial inclusion and access to capital, leaving the majority in poverty and despair. In addition, regulations would also drive criminals underground, making it very difficult for authorities to track down financial crimes such as fraud and money laundering. Hence, the government shouldn’t regulate Bitcoin.
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