Governments have a love/hate relationship with cryptocurrency. Thus far, it appears, they do not know what to make of it.
On one level, they cannot stand it. Cryptocurrency helps to provide rights to citizens they might not otherwise have. As stated on numerous occasions, this allows for the ledger of monetary transactions to be controlled by someone outside the banking industry.
This does not sit well with governments since they like to assert their power over the situation by regulating the banks. How effective this is can be debated. Nevertheless, the fact that we see politicians all over the world grandstanding shows how they like to inject their authority.
All of this leads to the knee-jerk reaction of "ban crypto". At a minimum, we see the efforts being made to regulate it. How all of this will turn out is going to be interesting.
There is another side to this discussion which some countries are just finding out about.
Not All Governments Are Treated Equal
Vladimir Putin might be one of the best things that happened to cryptocurrency. It is ironic how geo-politics is showing the power of this new technology.
Obviously, Putin and Russia are today's boogeymen. The West is aligned against it over the invasion of Ukraine. Following the typical playbook, one of the first actions taken is sanctions. Actually, those were put in place long before the actions towards Ukraine. The recent decisions only ramped them up.
It is not hard to figure out how being isolated from the global economy makes life very difficult. At the core of this is being able to make payments on a worldwide scale. This is what the West is trying to achieve with Russia. The idea is to isolate them financially to cause damage to the economy. If they can achieve this, the thinking is, maybe the Russian people will stand up and overthrow Putin.
To counter this playbook, we might be witnessing the emergence of cryptocurrency. As espoused, blockchain is designed to operate outside the reach of any government or central bank. This is in following with the Eurodollar system. Russia, along with anyone else, is able to take advantage of this.
Whereas the Eurodollar system is only available to banks, cryptocurrency can be used by anyone. Here is where Russians might become heavy users.
The government is thinking about letting its citizens use cryptocurrency for cross-border payments. This is an activity that was hindered severely by the actions by the West. Cryptocurrency offers a way around it.
Naturally, the government wants to retain control by having wallets issued through the central bank. Whether this is effective or not is of minor consequence.
What is important is that we are seeing the power of cryptocurrency in action.
Ends Financial Oppression
Anyone who seeks to financially control another is out of luck with cryptocurrency. This is something the world is going to wake up to. Russia might be the biggest entity to exhibit it but it is something that works all the way down the scale.
Since many blockchains are permissionless, they are available to anyone. The network does not care who uses it or for what purpose. As long as there is a wallet and access to the private key, transactions will be processed. The user can be doing so as an individual or at the request of a government.
This will, of course, get the likes of Senator Elizabeth Warren going. She will scream about Russia avoiding sanctions and how cryptocurrency needs to be stopped. Anyone using it is a criminal and only people with nefarious intentions operate in this realm.
The reality is that, for all the talk about leveling the playing field, the attacks by those who espouse this are misguided. Cryptocurrency does exactly that. Russia, being isolated due to their actions, can provide its citizens with a mode of financial operation.
At the same time, citizens who are oppressed by their governments, traditionally at the mercy of power hungry politicians like Warren, have the ability to transact outside their reach.
When dealing with a blockchain like Bitcoin, or even Hive, we can see how the ability to stop things is impossible. Since nodes are located all over the world, it is only a matter of time before the size becomes too great. Laws by governments created in the physical realm tend to be less effective in the digital world.
Putin is starting to realize this. There is an ironic twist: the same rights will end up in the hands of the Russian citizens too. If Russia can utilize it to get around the West, the people in that country could do the same to circumvent the government.
Blockchain does not play any favorites. It simply processes transactions based upon the code. Who is in control of the wallet is of no concern to the network.
This is the power of cryptocurrency. The world is just starting to wake up to it.
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