A cryptocurrency is a digital currency based on blockchain technology that uses cryptography as a means of security. Possibly, Satoshi Nakamoto is a brilliant person or a pseudonymous name for a team of geniuses that created the first bitcoin in 2008.
Cryptocurrency is simply a medium of exchange. It is a digital asset, which is designed to ensure financial transactions are safer using strong encryption, to track the output of additional units and to monitor asset transfer. Unlike centralized controlling and regulatory networks of digital currencies and banking, cryptocurrency uses decentralized monitoring systems.
The demand for cryptocurrencies is rising every day. Bitcoin is the most widely used form of cryptocurrency. Inspite of rising in popularity, cryptocurrencies are banned in some countries. Saudi Arabia, Algeria, Bolivia to name a few.
Let us see why come countries consider bitcoin as a threat to the nation;
In some countries, Bitcoin and other Cryptocurrencies are considered troublesome as they cannot be monitored or regulated by the government and financial institutions. Whatever justification a nation provides for banning crypto, it is all about keeping control of its own financial system.
The cryptocurrency market attracts people and criminals associated with tax evasion and money-laundering.
Our traditional banking institutions, which are recognized by most governments, are being challenged by the cryptocurrency sector. This means, transactions take place outside our normal banking system and can be carried out by someone who has not used the bank before, making it difficult to track the transaction.
For religious reasons, Saudi Arabia has outlawed Bitcoin, arguing that it is incompatible with Muslim law. Iceland forbade Bitcoin to protect itself against too much money leaving the country. On the simple ground that it does not control, it was forbidden by the Bolivian Government.
In 2015, Ecuador issued its own national cryptocurrency as a compliant scheme connected to the local currency, adding convenience to regular transactions. Many countries have lined up to launch their own digital currency.
Since there is no centralized database, the loss of a digital wallet could lead to a permanent loss of virtual currency. The presence of a digital wallet makes it more vulnerable to theft, such as robbery, hacking and malware. Cryptocurrencies are extremely volatile in nature because there is no protection asset backing them.
Because of its anonymous function, there is a risk of violating laws against money laundering and countering the funding of terrorism.
The topic of taxation is one of the many issues that emerge from enabling investment in and the use of cryptocurrencies. In this regard, the problem seems to be how to categorize cryptocurrencies for tax purposes and the particular activities involving them.
Is banning crypto a solution? When other countries worldwide are exploring and using the cryptocurrency market to build their economy.