As Bitcoin is decentralised, the network as such cannot be shut down by one government. However, governments have attempted to ban cryptocurrencies before, or at least to restrict their use in their respective jurisdiction. Governments could still try to jointly ban Bitcoin.
In short, no government can kill Bitcoin on its own. To even have a chance to stop Bitcoin, every government in the world would have to successfully coordinate simultaneously to shut down the entire Internet everywhere and then keep it off forever.
P.M. Mishra, the founder of Finlaw, a law consultancy firm, said the exchange of funds between banks and cryptocurrency exchanges would cease if the government outlaws cryptocurrencies. Mishra added that "you won't be able to purchase cryptocurrency using local cash" and "you won't be able to cash them in."
Governments are wary of Bitcoin because it threatens their control over the money system. Decentralization is at the heart of Bitcoin; therefore, the technology involved denies governments the ability to wield central control over transactions.
A fundamental characteristic of blockchain technology is transparency, meaning that anyone, including the government, can observe all cryptocurrency transactions conducted via that blockchain. Bitcoin transactions are publicly accessible because of the transparent nature of blockchain technology.
However, the increased adoption and interest in this virtual currency is why governments and banks fear Bitcoin. The more the public uses Bitcoin as a store of value and medium of exchange, the more the banks and governments lose control over the financial systems.
In its current form, Bitcoin presents three challenges to government authority: it cannot be regulated, it is used by criminals, and it can help citizens circumvent capital controls. Until the time that Bitcoin's ecosystem matures, it will continue to be viewed with distrust by established authorities.
In the end, some governments do not want to lose control over currencies because they cannot track down illegal activities that individuals will carry out with the cryptocurrency. Therefore, some economies fear this virtual currency.
While Bitcoin is welcomed in many parts of the world, several countries are wary of its volatility and decentralized nature. Some also perceive it as a threat to their current monetary systems while being concerned about its use to support illicit activities like drug trafficking, money laundering, and terrorism.
According to the U.S. Library of Congress, as of November 2021, a total of nine countries have banned cryptocurrency completely. These countries are Algeria, Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar and Tunisia.
No, Biden's executive order won't replace paper money with digital currency.
But crypto is not legal tender in Australia and is not widely accepted as payment. Most people don't use it for everyday transactions. It is not the sort of investment to use to build your savings. Once you invest there are no regulatory restrictions on how your funds are used.
People investing in private crypto should understand that it is does not have the authorisation of the government. There is not any guarantee that your investments will be successful or not, one may lose money and the government is not responsible for this, he said.
The short answer to that question is: banning Bitcoin illegal wouldn't be easy, and it could even be impossible. The cypherpunks (an individual who advocates for cryptography, the practice of safe communication) were prepared for that, and it's one reason decentralisation was so important in the set-up.
Banks make the integration of crypto into the traditional financial system difficult by preventing the easy day to day usage of your money and assets held in crypto. Going in and out of crypto, and reaping its rewards, is held back by high fees, complex transactions and slow processing times.
Cryptocurrencies typically use decentralized control as opposed to a central bank digital currency (CBDC). When a cryptocurrency is minted, or created prior to issuance, or issued by a single issuer, it is generally considered centralized.
A lack of Bitcoin knowledge is the most common reason why people don't buy it.
Krugman is a distinguished economics professor at the City University of New York and a 2008 Nobel Memorial Prize in Economic Sciences winner. “No, crypto doesn't threaten the financial system — the numbers aren't big enough to do that.
Bitcoin, the world's most traded cryptocurrency, will surpass money issued by central banks as the dominant form of finance worldwide in less than 30 years, according to a panel of fintech specialists.
Bitcoin's peer-to-peer network and the decentralized system give it the potential to disrupt any banking structure with a central authority significantly. However, Bitcoin also has a few redundancies and design flaws, making it difficult to kill central banks eventually.
A risk-averse economic climate, increased regulation, and crypto scams could all threaten the crypto industry in 2022. Stablecoins like Tether could also pose a significant threat if they don't have enough cash in reserve to support the tokens issued.
Fraud and Security Concerns
But some exchanges are fake, luring unsuspecting investors to open an account. When they make a purchase, the criminals steal the money and the investor never receives the cryptocurrency. Even legitimate exchanges can be dangerous because many of them may not have adequate security in place.
The fact of the matter is that most people don't know how cryptocurrency works. As such, these people might critique cryptocurrency as being valueless, risky, and just not worth their time. Lack of awareness is one of the biggest reasons why people don't trust crypto.
As with other CGT assets, if your crypto assets are held as an investment, you may pay tax on your net capital gains for the year. This is: your total capital gains. less any capital losses.
Cryptocurrency is legal in Australia, but it is largely unregulated and is not considered an asset class. Things are changing however, with the Federal Government announcing that it will start a world-first “token-mapping” project to see where there is a need for greater regulation in the sector.