The rise of cryptocurrencies like Bitcoin, Ethereum, Tether, and others have a lot of potential for altering global financial systems. Their independence and their lack of dependence on governments and global institutions have been perceived as a threat to nations and their sovereignty.
Many experts have pointed out how governments all over the world are looking to create nationalized digital currencies backed by their central governments to take on cryptocurrencies. This new digital currency has been called CBDC or Central Bank Digital Currencies.
The past few months have been particularly exciting, given the impact cryptocurrencies have had on foreign policy among nations. In this article, we are going to explore and engage with this in detail.
Cryptocurrencies and Nations: How Countries are Engaging with Crypto
The use of cryptocurrencies, both as a store of value and as a currency has been viewed from both angles. Some nations have engaged with the new fintech seriously in order to draw positives on their national economies.
Others have been more suspicious in their approach, trying to play the wait and watch. They are looking at the flow of cryptocurrencies within the economy and whether or not the same is being used for illegal activities.
A third group, who do not want to do anything with cryptocurrencies have outrightly banned them. This group believes in the conspiracy theory of some actor or nation, that wants to destabilize the national economy by jacking up the prices and engagement in crypto.
In short, the world is still grappling for answers to the many uses cryptocurrencies have. From countries welcoming the new tech with open arms to others who use imprisonment as a way of prohibiting its citizens from buying, selling, or trading in cryptocurrencies.
The Impact Cryptocurrencies can have on Global Economy
There is no doubt that using cryptocurrencies has a ton of advantages. The purpose of this article is not to discuss all the advantages. The same warrants a different article altogether.
However, the more you dive deep into the benefits, the more you realize that governments and other actors are irrelevant. Critics of governments and aggressive proponents of crypto have pointed out that nations use financial control as a hegemonic form of controlling their subjects.
Governments have a vested interest in traditional payments and fiat currencies. If you have ever done transactions, both within the country as well as made or received international payments, you will realize that 5%-10% of the total payment sum counts as commission.
What critics are trying to say is that this commission is one of the biggest sources of income for governments all over the world. By taking a cut on the honest hard-earned work of individuals and companies, governments are trying to fill in their coffers.
With crypto adoption, the same would not be possible anymore. The peer-to-peer system works between the sender and the receiver. There is no place for any intermediaries in between.
Are Cryptocurrencies a Strategy to destabilize a Country’s Economy?
Rather than dismiss the above question as something futile, it is important to engage with the same. There is no doubt, that government representatives can be apprehensive about something coming out of the blue and becoming so popular.
However, the threat perception should be properly investigated and a conclusion should be reached after. Many governments are running with a story-
‘Cryptocurrencies like Bitcoins are being engineered by foreign elements to promote discord and instability in the country. Foreign actors who are not well-wishers are pushing the same to structure some kind of chaos or breakdown of the economy.’
According to foreignpolicyi.org, the same has not yet been proven by any of the governments until now. The only real threat they see is to their own position and power.
The control that they have on people’s lives through the various governmental departments is slowly slipping away thanks to cryptocurrencies. This is something that they do not want under any circumstances.
The Final Word
With Bitcoin, Ethereum, and other cryptocurrencies showing lots of potentials, the next few years are going to be increasingly exciting. China and the United States are already working on their digital currencies. With Bitcoin breaking one record after another, cryptocurrencies are pushing for their place in global financial systems.