Government authorities do not want people to use bitcoin

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As industries become more global, it is vital to coordinate efficient and effective value chain services. One such disruptive technology changing how companies operate in this sector is bitcoin. Platforms have a robust algorithm that performs the research for bitcoin traders and makes trading easy. Also, it has helped many beginners to get started with bitcoin trading. To trade more effectively, you may visit https://bitcoin-champion.com/ the most recommended trading platform. 

 However, the industry needs a unified view of managing its use per se. For example, government authorities do not want people to use bitcoin because they believe people can use it for illegal activities such as money laundering, drug trafficking, and terrorism funding. 

In response to increased government regulation in cryptocurrencies like bitcoin, many market participants are exploring more and more comprehensive decentralized exchanges that are removing these regulatory barriers altogether by providing freedom in exchange execution.  

Decentralized vs. centralized exchange: Government Regulations:

A decentralized exchange, also known as DEX, is a marketplace where traders can buy and sell cryptocurrencies directly with each other. In centralized exchanges, government regulations pose a hurdle to conducting trade because they control the flow of currency transactions. For example, suppose you want to sell bitcoin on a centralized exchange like Coinbase and receive US dollars in return. In that case, the exchange needs to verify your identity and follow Anti-Money Laundering (AML) laws before you will be able to sell the bitcoin. 

The same goes if you try to buy bitcoin with your US dollars; the exchange will have to verify your identity for you to purchase the digital currency. This identity verification process adds time (e.g., a few minutes) to the all-too-familiar two-step process of buying and selling bitcoin.

DEXs take this identity verification process away from centralized exchanges, meaning that time is no longer a constraint when conducting trade, even in today’s expedited world. In addition, a DEX can be managed by anyone with access to a blockchain network. In this way, no third parties, such as government authorities or banks, are involved when transacting with cryptocurrencies like bitcoin. As a result, it can be a massive benefit to end users seeking to conduct transactions faster and more securely than what is available on centralized exchanges.

Reasons why the government is opposed to bitcoin:

  1. Money laundering:

Nearly all government authorities see bitcoin as highly vulnerable to money laundering because it is an anonymous digital currency. Furthermore, governments are concerned about its reputation in black markets where it will easily facilitate the trade of any product, including illegal ones like drugs or arms. According to Australia’s Department of Foreign Affairs and Trade, there are risks that criminals try to launder cryptocurrency by using bitcoin with the help of cash which the user then uses for illegal activities. 

  1. Bitcoin can undermine central banks:

Many people in government believe that bitcoin is highly vulnerable to undermining the efforts of central banks primarily responsible for currency creation and distribution. The reason why central banks are highly concerned about bitcoin is that it can help bypass their controls. For instance, this would give governments more control over inflation in countries such as Venezuela and Zimbabwe, where they have lost control over their local currencies.

  1. Bitcoin can remove reliance upon government authorities:

Bitcoin can remove reliance upon government authorities because it eliminates the need for people to trust particular banks which already have a lot of power in the financial sector. Furthermore, with bitcoin, people no longer have to rely on the central banks for currency creation and distribution. Instead, it is now outsourced to a decentralized peer-to-peer system that anyone can audit. 

It will be one of the most significant changes in many economies and give citizens more freedom from government control. But unfortunately, many governments, like China, are trying to ban bitcoin while others, like the Australian government, are trying to regulate its use. 

  1. Bitcoin is hard to regulate:

Governments want to regulate bitcoin more than other disruptive technologies such as telecommunication and the internet. Even though government authorities can ban its use in trading, people will continue to use it for private transactions. If governments can control their usage for private transactions, bitcoin could be more effectively regulated by people as a currency than others like money transfers.

  1. Bitcoin is difficult to tax:

Most governments see bitcoin as highly vulnerable to tax because it has no central authority controlling its transactions and operations, making it hard for them to perform taxation on its users directly. For instance, the United States Internal Revenue Service (IRS) considers bitcoin a commodity, which makes it difficult for the government to impose taxation laws on its users. 

Because of this reason, governments like Australia are trying to tax bitcoin transactions by using its’ GST tax Bitcoin transactions can never be reversed by another person after has been spent, which is one of the reasons why a lot of people in government believe that people could easily use it for illegal activities such as money laundering and terrorism funding. In real life, bank accounts are not reversible either but still have enough controls to protect them from being misused for illegal activities such as money laundering and terrorism funding.

To gain deeper understanding in technology and its practical uses, exploring geekpedia.com is highly advantageous, particularly for individuals eager to broaden their tech expertise.

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