Why Is Bitcoin The largest Cryptocurrency?
Bitcoin will have a fixed supply forever. There will never be a number greater than 21 million Bitcoins in circulation. Investors continually keep expecting that – since the crypto’s value is fixed, provided interest does not dwindle – there will be an endless growth impacting Bitcoin.
Bitcoin was compelled to plunge to $32000 from the highest heights this June. Excessive volatility could perhaps become burdensome baggage. However, the cryptocurrency that is first among equals has its fate furiously debated. Bitcoin is the largest cryptocurrency since it wields enormous influence. It has challenged banking as it stands today and is certain to impact it.
Bitcoin’s ascendancy over the US dollar?
If we are to trust Princeton historian Harold James, Bitcoin has begun to copy the international monetary language along the prerogative of the US Dollar. The national monetary era is aware of the passing away of a long-defended era . This decline has been catalyzed by the indiscriminate speeding of the digital revolution. This has opened up consumers’ and investors’ eyes, and many would gladly welcome a monetary revolution. New types of government-issued fiat currencies shall enter the fray. In addition, there shall be a real glut of private currencies generated innovatively. Unfortunately or otherwise, lawmakers and their advisors have taken to naming cryptocurrencies as ‘private currencies’, meaning that they are more ‘Wild West Than than amenable to genteel Laws. A government’s credibility, posit these opinion-makers, shall no longer affect a currency’s stability. James calls the Bitcoin dominated sphere the monetary order based upon information (as in ‘Information Society’). While the movement away from the gold standard was for the US Dollar, the move from a commodity-based monetary order to one that was fiat-currency based, Bitcoin has brought in a new stage of the monetary revolution. With Central Bank Digital Currencies (CBDCs) being aggressively envisioned for launch, Bitcoin’s impact on the policy-makers agenda globally is only because it is today the largest cryptocurrency.
Bitcoin upsets the Global Financial Order
The Bank of International Settlements financial economist Hyun Song Shin is to be numbered among the most aggressive critics of Bitcoin. Gathering the evidence, he repeated recently that Bitcoin and company are speculative assets and not legitimately ‘money’. Also, Bitcoin is used to help with money laundering, ransomware attacks and such financial crimes. All in all, he is contemptuous of Bitcoin and emphasises that central banks should speeden the adoption and issuance of their own digital currencies – if only to steal Bitcoin’s thunder.
Similarly, doubting the founding aims and objectives of Bitcoin, Financial Times’s Martin Wolf found himself in agreement with his Korean contemporary. He emphasises that governments and logically central banks must not surrender their duties as keepers of the public interest. Joining the ranks of all calling cryptocurrencies such negatively loaded words as ‘Wild West’, he pushes forward the view that ‘private currencies’ have no business being in business and are entirely ‘illegal’.
Such views have gained the ears of Washington. The president’s Working Group on Financial Markets, under Treasury Secretary Janet Yellen, has grave doubts about two stable coins , namely Tether and Facebook’s Diem. These stablecoins are supported by dollar assets. A Former Chairman of the Commodity Futures Trading Commission has reportedly gone on record that stablecoins are just like unsteady money market funds. Fed governor Lael Brainard has gone so far as to point out alleged similarity between stablecoins to wildcat banks’ notes issued in the 19th century US. If we are to trust George Selgin, this is rancid financial history.
Bitcoin vs Infrastructure Bill 2021
Bitcoin, Ethereum and other cryptocurrencies have made up the substance of the debates around institutional regulation and its effects. However, the several positions taken up by lawmakers were bipartisan. This at least reflects that regardless of party affiliations, lawmakers of all hues recognise the challenge posed by Bitcoin, the largest cryptocurrency.
In a speech courtesy of SEC Chairman Gary Gensler, we get a good idea of the commotion caused by Bitcoin’s standing.
Gensler agrees whole-heartedly with the authorities quoted above. He compared the crypto sphere and its way of operating to the less than legit ways of the intelligence Services under Kissinger. Just like Kissinger did not admit to wrongdoing in the extra-legal exercises of the Services, so too the crypto sphere regularly burnishes its status as a vehicle of speculation, unapologetically. Gensler demonstrated that public policy goals do not form any part at all of Bitcoin operations. Even then, Bitcoin has not even been used, he asserted, as a medium of exchange. He warned his listeners that the main objective of Bitcoin is to circumvent laws and regulations to enable money laundering, getting around sanctions, and such. He also agreed that the whole Bitcoin-induced scenario reminds us of the Wild West. Gensler pitched for Bitcoin regulation.
Drawing Bitcoin Regulation
Everything in the cryptosphere that induces a movement is, per Gensler, an unregistered security. This implies that Bitcoin exchanges be brought within reach of securities law, including commodities laws and banking laws. Thus, in his speech, Gensler finally tendered the recommendation that Congress enable the SEC to formulate rules for Bitcoin trading and lending.
The Biden Administration needed no more hints to add a provision to the Infrastructure Bill, considering crypto ‘participants’ – which are little more than nodes in a network – as taxable bodies. Per the provision, these nodes may be understood to be brokers’ and as such come within tax revenue collection regulation. However,since these nodes do not have all the information that they would need to submit to officialdom, if the Bill with this amendment were to be passed.
One of the responding amendments, thanks to Senators Warner and Portman, was shored up by Yellen and the Biden Administration , given that they wished to sidestep a long drawn out debate on standalone legislation. Rather these decision-makers would be content with a legislative basis for all-embracing digital financial surveillance.
All the amendments, however, have collapsed. The original bill stands unamended with regard to Bitcoin regulation. What’s emerged as a result of all the chinwags is the following: it is widely acknowledged that future regulation enforced with Bitcoin. in mind should not be anything approaching strangulation. The US stayed ahead since it was pro-innovation. Stablecoins connected to the USD actually permit the dominance of the Dollar as the main exchange medium internationally. Some do make the case that Bitcoin definitely ought to be brought under regulation, but in a language that accommodates Bitcoin Blockchain’s topography. As such, it will be ideal – in a class of its own , and unrestrictive.