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Whether you support or oppose Bitcoin, the ban of Bitcoins in a country is an interesting case study. In many countries, the dangers and instabilities of Bitcoin have been on the radar for years. Bitcoin is in a pseudo-legal limbo in many countries, so the effects of banning it are unknown. There are potential impacts of banning Bitcoin.
Some people are surprised about the ban in the country and consider it as surviving without the internet and email. This article will help you understand Bitcoin terminologies and their effects after the ban.
How are Bitcoins generated?
Bitcoins are a type of decentralized currency maintained without regulation or the need for any central authority. Many people are not aware of the concept of Bitcoin Mining.
The competitive and decentralized process of generating Bitcoins is called Bitcoin Mining, which adds newly generated Bitcoins to the system. Bitcoins exist as a state of information, and this information is available in a database known as a ledger.
How to Invest in Bitcoin and what is required for Bitcoin exchange?
If you are looking to invest in Bitcoin, you first need to have a Bitcoin wallet. It is a software program that securely handles your Bitcoin. Once the Bitcoin wallet is ready, you need to buy some Bitcoins from the Bitcoin exchange.
What is Fiat Currency?
Fiat currency is issued by the government but is not backed by physical commodities such as gold or silver.
For example, The most popular paper currency – the U.S dollar, falls under Fiat currencies. The crypto exchange is quite easy if the Bitcoin ban is not imposed. In the end, the Bitcoin ban is a bad idea as it will only lead to Black Marketing in the country.
Countries welcome bitcoin as a legal tender
El Salvador created a history by making bitcoin a legal tender. It encourages people to invest in cryptocurrency. Apart from these, countries like the United States and Japan are leading in accepting and dealing with cryptocurrency.
Why does the government feel the need to ban Bitcoin?
The idea behind Bitcoin was to produce a currency independent of government authorities and banks. To ban or not to ban is still an ongoing debate. The government isn’t against digital currency, but it believes investing in cryptocurrency is an illegal activity. It is a threat to the current monetary system.
Countries like China, Russia, and Vietnam have already banned Bitcoin. The banks and financial institutions in these countries have stopped dealing with Bitcoin or carrying out any transactions.
Consequences if Bitcoin gets banned in the country
Illegal trade will emerge if Bitcoin gets banned. A regulatory ban will not make people sit and stop working on it. It encourages investors to transfer crypto from one wallet to another.
The concept of finding alternative ways to deal with Bitcoin will take place. Black marketing trading – where people are ready to exchange fiat currency in return for Bitcoin will become an important part of the country.
Impact on Crypto Exchange industry
At this time, the Blockchain industry is quite innovative and contributes to financial products and services. Now, you will be wondering about the financial products created by Blockchain:
- Blockchain mobile app and web design
- Services used for crypto exchange such as wallets
These are the two most popular services which will have an impact if a ban is enforced. The innovation industry will be at a huge loss as the products will be illegal and of no use to humanity. If we consider the existing solutions by these industries, they might have to struggle to come up with better solutions than the existing ones.
Adds a new responsibility for government
Enforcing the law is not as easy as it first seems. People will start an underground market for bitcoin trading, and the government cannot track these illegal activities.
An illegal activity where people deliberately avoid paying tax. We can say cryptocurrency is difficult but not impossible to track. Some users will no doubt still try to hide earnings from the tax authorities.
The government will have to track down every individual and business account and stop them from trading to stop the market, which is quite a task to achieve.
Many companies have started hiring developers and operations teams skilled in Blockchain Technology or are ready to invest their time understanding and working with Bitcoin. A ban on Bitcoin will snatch away employment opportunities and lead to the shutting down of businesses.
One step back from the Bright Future
Cryptocurrency is booming, and many people have started using it as a currency. As per the estimate, the global blockchain market size will grow from $3.0 to about $39.7 billion by 2025.
A country imposing a ban will not be a part of a list of countries growing in the future.
Is there any way to get back your Bitcoin if the country bans it?
It is one of the most stressful questions for Bitcoin investors. But, the good news is you can still withdraw the amount you have invested in Bitcoin. The only condition is you cannot directly transfer to your bank accounts.
Bitcoin investing first goes into the app wallet-which you must have already created at the beginning of the Bitcoin exchange and then can be transferred over to your bank account.
Let us say the government enforces a ban today. But before such a huge step, the government will consider the damage to investors and companies. To improve the condition, the government will grant some ultimatum to trading companies to return users’ investment and make an exit from the market.
Corruption will soon make an entry, and the government will see a dip in taxes. Instead of imposing a ban on Bitcoin and criminalizing digital currency, the government must reconsider the financial restrictions in the country and encourage innovators to grow ahead.
The status of Bitcoin may have a lasting economic impact. Each country has a unique perspective on Bitcoin. Some countries are banning Bitcoin, and others are not sure what to do. A long-term solution for the government would be to create a more desirable investment country and reduce restrictions on capital mobility.Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.