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Cryptocurrency has a measurable effect on economies
That is why some are fearful of it — while others embrace it.
One month into 2022, the cryptocurrency debate is already raging, with proposals for regulation creating a schism between countries that are "crypto friendly" and those that are not. Which party will determine the market's future?
Dmitry Chernyshenko, Russia's Deputy Prime Minister, reportedly signed a roadmap for regulating cryptocurrency businesses in the country. The development follows the publication of a consultation paper by Russia's central bank proposing a blanket ban on crypto-related activity in the nation.
According to the research, titled Cryptocurrencies: Trends, Dangers, and Regulation, "aggressive adoption of cryptocurrencies poses major risks to the Russian financial industry." It asserts that non-state-based currencies endanger citizens' well-being by causing investment losses due to market instability, scams, and cyber assaults.
Jurisdictions have wrestled with the notion that decentralised digital currencies offer an alternative to sovereign money — and hence undermine central banks' ability to conduct monetary policy.
Although Russia has refrained from entirely suffocating activities within its borders, the recent events reflect a broader trend of states grappling with cryptocurrency adoption. Destiny prohibitions or laws will influence the industry's future.
Cryptocurrency prohibition or pro-cryptocurrency?
China has repeatedly prohibited bitcoin trading. Last year's outright ban on crypto mining was a big blow to the sector, given the majority of crypto mining occurred in China.
Mining is a process that involves the execution of software on computer servers in order to solve cryptographic algorithms. This procedure verifies transactions and creates a shared record of them for the whole blockchain network. Participants, referred to as "miners," are automatically paid in cryptocurrency.
Mining is a global sector, and significant capital investment is required to establish mining warehouses.
The Chinese mining embargo compelled miners to sell or export their equipment abroad and invest in more hospitable jurisdictions, most notably the United States. As a result of diversifying mining operations, one of the consequences was the strengthening of the network. As a result, future prohibitions may have a smaller impact on the market.
At the moment, the majority of Bitcoin mining takes place in the United States, Kazakhstan, Russia, Canada, Malaysia, and Iran. Certain networks confront significant obstacles. For example, in Kazakhstan, power has reportedly been rationed away from miners in order to conserve energy during periods of energy scarcity, prompting miners to flee the nation.
According to reports, Kazakhstan's economy will suffer a cost of US$1.5 billion (or A$2.14 billion) over the next five years, including US$300 million in lost tax revenue.
Cryptography is not completely 'anonymous.'
Since the initial introduction of Bitcoin in 2009, cryptocurrency has gone a long way. There are currently thousands of cryptocurrencies, with a combined market capitalisation of over US$1.66 trillion (almost A$2.36 trillion).
It is frequently argued, particularly in a recent report by Russia's central bank, that the anonymity provided by cryptocurrencies facilitates unlawful activities such as money laundering, terrorism financing, and drug trafficking.
This statement is not totally accurate. Indeed, the history of transactions on public blockchains such as Bitcoin and Ethereum (the two largest in terms of market capitalisation) are public.
Numerous governments (including Australia's and the United States') partner with huge private blockchain analytics corporations to monitor citizens' crypto wallet addresses and transactions. They do so in order to mitigate money laundering and tax evasion threats.
Contrary to popular opinion, the majority of cryptocurrencies are pseudonymous. If a person's identity is associated with their wallet address via a central point of contact, such as a cryptocurrency exchange or an email, the wallet address can be traced back to the individual.
According to research conducted by the Rand corporation on behalf of Zcash, there is no widespread criminal use of "privacy coins" that protect users' anonymity.
Future directions will be determined by policy
Cryptocurrency is gaining traction as a financial asset class, technological infrastructure, and social experiment in decentralised infrastructure.
As a result, crypto communities are gaining clout in public policy debates. For instance, cryptocurrency proponents were able to stall a significant federal government infrastructure plan in the United States last year.
Nonetheless, jurisdictions pursue distinct paths in terms of policy and legislation. China and Russia, for example, perceive it as a fiscal and ideological threat to national currencies. Others see it as a chance for economic growth, innovation, and investment.
As new ways emerge, 2022 may be a watershed year for both the cryptocurrency business and those vying to ban or embrace it.
Historically, countries that embrace crypto networks have reaped economic benefits in the form of innovation, investment, jobs, and taxation. The business benefits of embracing cryptocurrency as a digital asset include increased access to new demographics and more technological efficiency in treasury administration.
At the same time, the industry's response to policy and regulation reveals that cryptocurrency is not a wholly decentralised entity existing just on the blockchain.
Australia's stance
Australia has emerged as a prospective destination of "crypto friendliness" in the fight to limit yet gain from cryptocurrencies. A Senate Select Committee on Australia as a Technology and Financial Centre report issued in October takes a favourable view on cryptocurrencies.
It proposes market regulation of cryptocurrency exchanges, simplified taxation, and a regulatory framework for "decentralised autonomous organisations," or DAOs. These operate on the same self-governing principle as decentralised cryptocurrency networks, managing participation and enforcing regulations through the use of blockchain technology and cryptocurrency tokens.
Australia's choice is to seize the immense economic opportunity presented by decentralised digital assets. It remains to be seen how this will affect the national economy. However, if history is a lesson to be learned, we can anticipate policies influencing outcomes.
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By Crypto PiratesThat is why some are fearful of it — while others embrace it.
One month into 2022, the cryptocurrency debate is already raging, with proposals for regulation creating a schism between countries that are "crypto friendly" and those that are not. Which party will determine the market's future?
Dmitry Chernyshenko, Russia's Deputy Prime Minister, reportedly signed a roadmap for regulating cryptocurrency businesses in the country. The development follows the publication of a consultation paper by Russia's central bank proposing a blanket ban on crypto-related activity in the nation.
According to the research, titled Cryptocurrencies: Trends, Dangers, and Regulation, "aggressive adoption of cryptocurrencies poses major risks to the Russian financial industry." It asserts that non-state-based currencies endanger citizens' well-being by causing investment losses due to market instability, scams, and cyber assaults.
Jurisdictions have wrestled with the notion that decentralised digital currencies offer an alternative to sovereign money — and hence undermine central banks' ability to conduct monetary policy.
Although Russia has refrained from entirely suffocating activities within its borders, the recent events reflect a broader trend of states grappling with cryptocurrency adoption. Destiny prohibitions or laws will influence the industry's future.
Cryptocurrency prohibition or pro-cryptocurrency?
China has repeatedly prohibited bitcoin trading. Last year's outright ban on crypto mining was a big blow to the sector, given the majority of crypto mining occurred in China.
Mining is a process that involves the execution of software on computer servers in order to solve cryptographic algorithms. This procedure verifies transactions and creates a shared record of them for the whole blockchain network. Participants, referred to as "miners," are automatically paid in cryptocurrency.
Mining is a global sector, and significant capital investment is required to establish mining warehouses.
The Chinese mining embargo compelled miners to sell or export their equipment abroad and invest in more hospitable jurisdictions, most notably the United States. As a result of diversifying mining operations, one of the consequences was the strengthening of the network. As a result, future prohibitions may have a smaller impact on the market.
At the moment, the majority of Bitcoin mining takes place in the United States, Kazakhstan, Russia, Canada, Malaysia, and Iran. Certain networks confront significant obstacles. For example, in Kazakhstan, power has reportedly been rationed away from miners in order to conserve energy during periods of energy scarcity, prompting miners to flee the nation.
According to reports, Kazakhstan's economy will suffer a cost of US$1.5 billion (or A$2.14 billion) over the next five years, including US$300 million in lost tax revenue.
Cryptography is not completely 'anonymous.'
Since the initial introduction of Bitcoin in 2009, cryptocurrency has gone a long way. There are currently thousands of cryptocurrencies, with a combined market capitalisation of over US$1.66 trillion (almost A$2.36 trillion).
It is frequently argued, particularly in a recent report by Russia's central bank, that the anonymity provided by cryptocurrencies facilitates unlawful activities such as money laundering, terrorism financing, and drug trafficking.
This statement is not totally accurate. Indeed, the history of transactions on public blockchains such as Bitcoin and Ethereum (the two largest in terms of market capitalisation) are public.
Numerous governments (including Australia's and the United States') partner with huge private blockchain analytics corporations to monitor citizens' crypto wallet addresses and transactions. They do so in order to mitigate money laundering and tax evasion threats.
Contrary to popular opinion, the majority of cryptocurrencies are pseudonymous. If a person's identity is associated with their wallet address via a central point of contact, such as a cryptocurrency exchange or an email, the wallet address can be traced back to the individual.
According to research conducted by the Rand corporation on behalf of Zcash, there is no widespread criminal use of "privacy coins" that protect users' anonymity.
Future directions will be determined by policy
Cryptocurrency is gaining traction as a financial asset class, technological infrastructure, and social experiment in decentralised infrastructure.
As a result, crypto communities are gaining clout in public policy debates. For instance, cryptocurrency proponents were able to stall a significant federal government infrastructure plan in the United States last year.
Nonetheless, jurisdictions pursue distinct paths in terms of policy and legislation. China and Russia, for example, perceive it as a fiscal and ideological threat to national currencies. Others see it as a chance for economic growth, innovation, and investment.
As new ways emerge, 2022 may be a watershed year for both the cryptocurrency business and those vying to ban or embrace it.
Historically, countries that embrace crypto networks have reaped economic benefits in the form of innovation, investment, jobs, and taxation. The business benefits of embracing cryptocurrency as a digital asset include increased access to new demographics and more technological efficiency in treasury administration.
At the same time, the industry's response to policy and regulation reveals that cryptocurrency is not a wholly decentralised entity existing just on the blockchain.
Australia's stance
Australia has emerged as a prospective destination of "crypto friendliness" in the fight to limit yet gain from cryptocurrencies. A Senate Select Committee on Australia as a Technology and Financial Centre report issued in October takes a favourable view on cryptocurrencies.
It proposes market regulation of cryptocurrency exchanges, simplified taxation, and a regulatory framework for "decentralised autonomous organisations," or DAOs. These operate on the same self-governing principle as decentralised cryptocurrency networks, managing participation and enforcing regulations through the use of blockchain technology and cryptocurrency tokens.
Australia's choice is to seize the immense economic opportunity presented by decentralised digital assets. It remains to be seen how this will affect the national economy. However, if history is a lesson to be learned, we can anticipate policies influencing outcomes.
Support us!