Not since the birth of the system of “money” as we now know it has money ever been separate from governing bodies. The control and thereby power of monetary relations have always been held in the hands of the head of state.
Going back to 5000 BC, money was not a good or service. Its value was placed on by a community and was seen as equal to exchange for actual goods or services. Eventually we moved on to metals (silver, gold) then coins, then paper money, each being easier to make and exchange. Now there’s electronic money – even easier still – just tap a bank card or click some buttons and exchanges are made without physical materials.
In official terms, we went from commodity money to representative money. Commodity money being something of value in and of itself, like salt and metals. Representative money being something with no other value other that which we placed on it, like paper money. Representative money has to be backed by governments and banks. Representative money was then updated to fiat money, a legal tender whose value is backed by the government that issues it, and it’s illegal to reject its value.
In this context, it’s easy to see that money has almost never been separate from the control of the state and banks, and it gives us a hint as to why cryptocurrency hasn’t been fully welcomed by governments.
Cryptocurrency is an internet-based medium of exchange which uses cryptographical functions to conduct financial transactions. Cryptocurrencies use blockchain technology to gain decentralization, transparency, and immutability. Its most important feature is that it is not controlled by any central authority: the decentralized nature of the blockchain makes cryptocurrencies theoretically immune to the old ways of government control and interference.
Most countries haven’t out rightly made cryptocurrency illegal, with most going with a cautious but opportunistic approach. However, nine countries have banned some sort of cryptocurrency usage, and 10 more countries have placed restrictions and bans on its use, as of early this year.
The EU hasn’t issued any official legalities on cryptocurrency, thereby giving EU countries free reign to decide for themselves. In Ireland, cryptocurrency can be used while not being a legal tender, however it is still taxed. For its users, this virtual system comes with positives and negatives. There are no exchange rates, low to no transaction fees and interest rates.
In ways it prevents vulnerability in that, only what you give can be taken. While it may seem like a given, in a lot of other virtual transactions, the amount taken is up to the integrity of the taker, which leads to risks, with for example credit cards being hacked.
Cryptocurrency is also accessible to everyone with an internet access, everywhere and anytime. It’s a decentralized system, meaning it has no one governing body, but rather requires accumulated action from the collective – giving back some sort of control of the money system to the people.
But, there are also risks as the platforms being used must be trustworthy. Last month, an Irish cryptocurrency platform, ‘Bitsane’, disappeared, taking hundreds of thousands of users’ assets with it. On a wider scale, cryptocurrencies such as Bitcoin, by their anonymous nature, have been accused of being used for criminal activities, such as money laundering.
Despite governments making their concerns heard on the risks associated with it, the use of cryptocurrency seems to be widening, with for example Facebook planning to launch a new cryptocurrency platform called Libra. The future will tell who, from the citizens to governments, get the final word. But cryptocurrency clearly has no intention to slow down.
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