Explained: What is the New War on Bitcoin?

Believe it or not, bitcoin is now playing in the big leagues. Other than Donald Trump slamming bitcoin on Twitter, The Treasury Secretary called digital currencies a national security threat, while the chairman of the Federal Reserve urged caution.

Meanwhile, India has an all-out ban on bitcoin while China is keen on creating their own cryptocurrencies.

This seems to be as theorized by Eric Voskuil. He proposes a “global war on bitcoin” .

Bitcoin vs. the Government 

The thesis states that Bitcoin will go through four phases in its battle with states and regulators.

The US is in the “honeymoon” phase especially with the onerous New York BitLicense. The  governments don’t outlaw bitcoin entirely, but they are heavy regulations on companies operating in the cryptocurrency ecosystem.

“[This phase] is characterized by a desire of state agencies to retain regulatory control.”

The SEC and FINRA have doubled down on crypto custody this month, while Treasury Secretary Mnuchin said these digital currencies like bitcoin would be held to the “highest standards.”

The black market phase is where governments fully outlaw bitcoin transactions and mining as states feel their monopoly on minting money is on the line. India for example has banned Bitcoin from all forms of transaction and is in the black market phase.

Voskuil predicts that states may start to issue their own cryptocurrencies:

“This may coincide with the adoption of official new money, i.e. Fedcoin.”

Indian regulators seem to be proposing a “Digital Rupee” that would be only legal within the country.

China, Iran, Venezuela, and Russia are other countries experimenting with similar strategies. 

The “Global war” 

As Voskuil agrees these stages are not necessarily sequential and can overlap. The countries are mostly divided amongst honeymoon and blackmarket phase. He adds that things could get ugly if states starts pumping out their own digital currencies.

“As states collaborate to protect their monies, this may become a global “War on Bitcoin”

 Nic Carter, the co-founder of coinmetrics.io expects the US to tighten their regulations than issue a downright ban. He says:

“I’m not saying it’s guaranteed to happen in the US, but I think regulators could definitely tighten the noose (rather than full illegalization).”

One thing for sure is that the coming years are definitely make or break for cryptocurrencies. Either we’ll see a downright War on Cryptocurrencies or we’ll see Cryptocurrencies revolutionize the finance industry forever. 

Only Time Will Tell.
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