Governments have never really been big fans of crypto. Sure, the weird finance minister and president have famously embraced blockchain technology or even cryptocurrency even on the rare occasion, but overall the general mood has been suspect and even outright hostile.
And now, with Facebook entering the industry with Libra stablecoin, this barely hidden resistance to cryptocurrency has become completely manifest, in various ways. US President Donald Trump openly shut down Bitcoin and Libra in July, while a number of governments have already begun to flirt with the ideas of cryptocurrency bans and the central bank's digital currencies.
Both of these potential responses are conceived as a means of neutralizing the threat that decentralized or private currencies, such as Libra, pose to government monopoly over money. However, as many cryptocurrency experts report, it is likely that & # 39; fiat currency improvement & # 39; will not be enough on its own to reduce this threat, given that the main advantage of crypto is the divorce from government, central banks and other centralized institutions. [1
Governments love to ban things. Bitcoin and cryptocurrency are no exception to this, as evidenced by their complete or partial bans in the following countries: Afghanistan, Pakistan, Algeria, Bolivia, Bangladesh, Republic of Macedonia, Saudi Arabia, Vanuatu and Vietnam (all complete bans); China, India, Ecuador, Indonesia, Morocco, Zambia, Nepal, Egypt, American Samoa and Qatar (all partial bans or restrictions).
However, as triggering as different governments have been in recent years, it is clear that banning cryptocurrencies is not really a viable way to reduce the threat they pose to the state monopoly on money.
"Some governments have tried to ban cryptocurrencies, but this has not prevented people from using them and the industry is expanding," Iqbal V. Gandham – CEO at eToro UK – tells Cryptonews. com .
"If people want to use these symbols, there is little government can do to stop this. It would be like trying to ban the internet."
This & # 39; unstoppability & # 39; is a big part of why governments are afraid of crypto. And now the rise of Facebook's Libra stablecoin has lifted the spectrum of a private currency that has become a true rival to national fiat currencies, as explained to Cryptonews.com by Glen Goodman, author of The Crypto Trader .
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"Facebook's Libra is the first cryptocurrency that really scares big governments, even if it doesn't even exist yet," he says. "Donald Trump summed it up in a tweet when he smashed Bitcoin and Libra, saying that the dollar will & # 39; ALWAYS & # 39; be the world's dominant currency. He knows the United States is getting huge economic benefits from that position, and no doubt he will do something to protect it against currency denominators. "
So governments are afraid of cryptocurrencies and they cannot adequately ban them (at least not in the case of decentralized coins). So what can they do?
Well, they can try to create their own central banks digital currencies (CBDC) and / or digitize existing fiat currencies.
"Governments will try to centralize [crypto]," predicts cryptocurrency adviser Sydney Ifergan, "and at the same time do it to their advantage."
This has already happened in the notorious case of Venezuela's Petro, while as China, Sweden, Ukraine and Uruguay have researched or planned their own CBDCs. Similar moves have been rumored for Iran and Russia, apparently for the purpose of evading US sanctions.
On top of this, the US Central Bank recently revealed plans to create a central bank-controlled nationwide payment system in the United States, to make it faster and more efficient and potentially superior than Bitcoin and other cryptos in terms of performance.
But is it better?
The question is, even if large nations launch their own centralized cryptocurrencies or new digital payment systems, will superior performance alone be enough to neutralize the threat of crypto against national monetary sovereignty?
Well, firstly, it is not even clear that a central bank-supported CBDC or payment system will technically be superior to large cryptocurrencies. And as cryptocurrency writer Mark Jeffrey explains, the development of such projects will be slowed by the centralized, creepy nature of the organizations that run them.
"Recently, the Federal Reserve announced a real-time payment system called & # 39; FedNow. & # 39; However, & # 39; FedNow & # 39; will not be available until 2023: ridiculously far ahead," he told Cryptonews.com.
"This is like watching the taxi industry try to answer Uber: the trials are somewhere between comical and sad. The Federal Reserve has never been forced to innovate and compete: they have absolutely no idea how to do it."
Also deadly is their lack of decentralization, which stands as the main selling point for real cryptocurrencies.
"Cryptoassets like Bitcoin are not about digitizing money," says Iqbal Gandham. "The whole reason Bitcoin was created was its ability to bypass financial institutions, like banks, and issue governments, like governments, in an effort to create a currency that was limitless and decentralized."
"Just a symbol of a traditional fiat currency that it can trade on the blockchain will not challenge the premise where crypto assets, including Bitcoin, were created."
It is for this reason that crypto has an advantage against CBDCs or real-time fiat payment systems. Yes, they could potentially end up being faster than many cryptocurrencies, but a relative lack of speed has not stopped Bitcoin from gaining traction in recent years, despite the fact that the Visa network was and still is faster than Should society begin to value monetary freedom more than speed (which is really a solvable technical problem) and price volatility declines as the market matures, the traditional fiat-money ystem can face some serious questions about its future.