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Cryptocurrency is a comparatively new domain in the technology space and is a menace to financial regulators worldwide. Never before there was any financial asset that was too technical to understand for the financial experts. Whenever we are faced with a new challenge, we think of three ways to react – avoid, accommodate or accumulate. Dodging is the easy way out as we would not need to understand and know the details of the thing, while to accommodate we need to know the basic working of the technology and also the pros and cons it brings along but to accumulate we need to have expert knowledge and ability to analyze and apply the new technology to extract great results.
It has been more than a decade now since the introduction of Bitcoin in 2009, and there are now thousands of such cryptocurrencies in the world market. Still, various nations struggle to come to terms with these currencies as it gets more complicated with too many coins and extreme dynamism in the field.
It gets tough to arrive at a consolidated idea of what is happening and how it is happening. Few nations like China, Turkey and Saudi Arabia banned cryptocurrencies. The US, Canada and South Korea regulate them while El Salvador and Cuba go one step ahead by promoting Bitcoin and cryptocurrency as legal tender, respectively. The main advantage of banning cryptocurrency is that it gives the nations lesser headache and allows them to maintain their financial policies. Cryptocurrency is not just a currency or financial instrument, but it is also a growing futuristic financial database management technology. Hence banning them won't help these nations in the long run.
Regulating these currencies seems to be the right step forward, as it will place the nations in a ready-for-future mode, but promoting them will allow technology-based companies to grow and innovate in the field. The primary significance of cryptocurrency is that they are truly international currency, and by allowing the citizens to accumulate the suitable coins, the nations do a massive favour to themselves and their citizens. Moreover, by promoting innovative usages of cryptocurrencies or blockchain programming, the country can tap substantial financial resources into their place and bringingbring riches to the nation. Non Fungible Tokens (NFTs) are a good example. NFTs are an application of blockchain & cryptocurrencies in a different form, and they helped hundreds of artists to sell their art at a premium price.
If nations promote such activities, the artists from the countries will prosper and contribute to the nation's welfare. There is no doubt that cryptocurrencies are trading with colossal volatility and at high risks. When the financial risk involved is too high, it will largely fall on any country's central bank's shoulders. But that is normal for any product or company in the growth phase to go through.
South Korea established Korea Financial Intelligence Unit to regulate trading in digital assets, including cryptocurrencies. Similar efforts are needed to be taken by the central banks of each nation, and also need to establish a technological wing to formulate a strong growth chart for the future through digital assets and management. Banning and repelling the new technology will prove costly to any country that depends on Information technology and science.
In short, banning is not the right solution to a growing technology that brings power to people. Hence regulations should be made to stop people from abusing the technology for the sake of themselves.