The technology aims at increasing efficiency and saving time. In the world of business, technology has played an active role through online transactions and online meetings conducted through conferencing. Additionally, online purchases have experienced a shift from the conventional physical currency to cryptocurrency like bitcoin. Cryptocurrency refers to a digitalized form of money generated by cryptocurrency Industries operating exclusively from a central bank.
Despite the growth of cryptocurrency in the current market, concerns have arisen about its decentralized system. An unregulated form of currency can be disastrous since the money serves a personal interest. Although cryptocurrency aims at creating a robust blockchain system, functioning without restrictions is risky and yields to problems such as drastic fluctuations of currency units, a current problem experienced by numerous cryptocurrency companies. Therefore, cryptocurrency regulations are crucial for the durability of the system. Some of the rules should include exchange regulations, mining, retail usage, and institutional usage.
Exchange deals with buyer-seller transactions and withdrawal transactions. Consequently, the transactions involve asset trade or the conversion of the assets to FIAT money money. Also, to prevent money laundering, the government should be mandated to assign identities to account holders. Therefore, anonymous accounts are granted a limited withdrawal amount. Likewise, through government involvement, profit and asset can be appropriately taxed.
As noted above, cryptocurrency is a decentralized form of currency independent of the central bank and excludes insurance. However, government involvement will necessitate the companies to adapt to higher security systems hence minimizing the risks of hacking.
Mining cryptocurrency refers to the procedure of accumulation of transactions to the blockchain and discharging new currencies. However, the mining process involves the usage of expensive hardware and robust computational power. Mining relies and functions on the Proof of Work algorithm. Therefore, the government can pay either tax directly due to high electricity usage or the addition of special charges.
The major stumbling block to the growth of cryptocurrency is the lack of daily usage and acceptance by ordinary citizens. The government may impose regulations that will either allow or prevent cryptocurrency usage by service providers and retailers.
Another inhibition of cryptocurrency development is the lack of involvement by financial institutions. As stated above, financial institutions like banks prevent cryptocurrency transactions. However, with new government regulations, cryptocurrency can merge with a financial institution and promote a digitalized form of currency. Additionally, like the regular currency, the government can regulate currency value. Thus, cryptocurrency regulations are needful to the government since it will benefit from the taxes imposed on cryptocurrency Companies.