In 2008, a person (or people) operating under the moniker Satoshi Nakamoto released a white paper online titled Bitcoin: An Electronic Peer-to-Peer Cash System. Within the paper, Nakamoto described how a decentralized digital currency could effectively replace FIAT money, and how such a currency would operate. The crypto savant put his theory to the test, and released Bitcoin the next year.
Today, Bitcoin, and crypto in general, is one of the most commonly and most popularly traded goods in the world. In a few short years, the crypto market has become the third most popular trading market in the world. The growing success of Bitcoin, and similar alt coins has also prompted a discussion among legislators; should crypto be regulated?
The Growing Popularity
Without the growing popularity of cryptocurrency, Bitcoin would not even register on most legislators’ radar. It is precisely because of that reason that, only recently has this discussion been brought up. Crypto has been around for 15 years now, and it is only within the last two or three that major legislation has been passed to control the market. So, what has changed?
As we said, crypto is growing in popularity. It is now the third most popular market to trade in, behind only stocks and forex. Major businesses are accepting cryptocurrency as a viable payment method. As an example, we can look at online casinos. Look at the US’s real money casinos from casinos.com, and you will find that, while many operate using FIAT money, crypto transactions are growing in popularity.
It isn’t just online businesses that are looking to expand into the crypto trade. Plenty of reputable companies now allow their customers to pay using Bitcoin. Examples here include Starbucks, Whole Foods, Microsoft, and more. With the growing success, it may not be shocking that legislators are trying to regulate the market. But, what do crypto traders think about regulation?
Philosophical Opposition
Crypto traders are staunchly against the idea of regulation, at least those who’ve been deeply entrenched in the industry from the very start. In their original paper, Satoshi Nakamoto lists some of the inspirations for crypto, among which is the economist and philosopher, Friedrich Hayek. Hayek believed in the decentralization of money, an idea which was at the core of his philosophy.
Nakamoto is an admirer of Hayek, and a libertarian. In their mind, Hayek’s idea could easily be achieved using digital currency. Most of the people who’ve been following Bitcoin, and the crypto movement from the beginning follow those same ideals. In other words, regulation is directly opposed to what crypto traders and cryptocurrency are all about.
Bitcoin was created specifically to bypass traditional financial institutions and government control. If a government were to regulate the market, the very core of what cryptocurrency is all about would be lost. For that reason, crypto traders are strictly against regulation. Of course, philosophy is not the only reason some people are against cryptocurrency.
Anonymity and Privacy
At this point, cryptocurrency has become so big, that most households are, at least, aware of the concept. Which is to say that it is silly at this point to claim that only libertarians, or followers of Hayek are a part of the market. Some traders may not even know about the connection between Nakamoto and Hayek, and some may simply not care.
What a lot of crypto traders do care about, however, is their anonymity and their privacy. We live in a fantastic world, where the internet can help you propel your kids’ academic success, learn new things at the drop of the hat, and discover connections all over the world. However, it is also a world of cybercrime, identity theft, and other internet-related problems.
That is why people value their privacy and their online anonymity. With crypto as it currently is, anonymous, difficult to trace transactions are the norm. However, if the legislators were to get involved, any promise of privacy would be lost. After all, crypto transactions would have to be traced, and therefore the identity of everyone involved would have to be public.
Stifled Creativity
Part of the reason that the crypto market has taken off in the way that it has is because of the lack of government interference. If government regulations were put into place, who knows whether Nakamoto would have been able to release Bitcoin in the way that they did. More importantly, coins like Tether, Ethereum, and Litecoin may not have been possible at all.
A fear that many crypto traders have made clear is that any sort of legislation around cryptocurrency would lead to restrictions in innovation. The worst part would be that it wouldn’t just be the crypto market that is affected, but also blockchains. Blockchains are the lifeblood that crypto runs on, but they are also seen by many people as the internet’s future. Of course, a lot of people are against stifling the innovation that they can bring.
Arguments in Favor of Regulation
In this final section, we would like to list a few of the arguments in favor of legislation. In the interest of being fair, we are going to look at the arguments at face value, and in the best possible light. For example, one major argument relates to market stability. We all understand that crypto has a volatility problem right now. With regulation in place, the coins would become a lot more stable.
On top of that, if the government placed some restrictions on the market, a lot more people would feel safe in adopting crypto. Mass adoption of Bitcoin and similar altcoins would lead to a major boost in the market. In other words, cryptocurrency would become mainstream. The main argument against this is that crypto is already mainstream, even without regulation.
Finally, regulation of crypto would lead to a decrease in crypto-based scams. Consumers would thus be safe to trade or purchase whatever they wish, knowing that they are safe from any external threats. The trade off, however, is that anonymity would be fully lost.