How Bitcoin Shape up the Current Geopolitical Issues
Bitcoin is the revolutionary concept that is about to change how we understand and deal with finances forever. Since its release in 2009, the best-known cryptocurrency has taken the world by storm. It delivers an alternative to fiat money, quicker bank transfers and countless possibilities of development for blockchain-based digital assets.
Many see Bitcoin as the next best thing since the invention of the internet. And just like the world wide web, its influence might surpass the borders of the financial system and shape up geopolitical issues.
The current status quo of the international economic system took several centuries to form. The advent of crypto technology may not overhaul it overnight. However, it may become a game-changing asset for governments that wish to destabilize the dollar-based financial order.
How the big powers treat Bitcoin
Since their invention, cryptocurrencies have made it difficult for countries to regulate them. The recent problems that Facebook’s Libra is facing in meeting US regulatory standards is a clear sign that governments do not take cryptos lightly.
Bitcoin and other digital currencies that made it big in recent years (Ethereum, Litecoin, Ripple) have undergone a strenuous process to receive global acceptance. Most of them still face stiff institutional opposition from governments and banks.
To get a better view of Bitcoin’s geopolitical influence we should take a look at how the most powerful countries in the world treat it!
The United States
Since 2013, the US Government has strict regulations on Bitcoin. It accepts the digital asset as a decentralized virtual currency that users can trade in online transactions. In 2015, the Commodity Futures Trading Commission (CFTC) declared Bitcoin a commodity.
Bitcoin is legal in the United States, and it can even be the subject of taxation in the form of virtual property. At the moment, few other cryptos aspire to the same level of regulations that Bitocin enjoys in the US.
The world’s second-largest economy has fought a long battle against decentralized cryptocurrencies. Like most of the financial transactions that occur in China, the government has to have a strong grip on everything blockchain-related.
Surprisingly, the end of October 2019 has brought a wind of change in China’s relationship with virtual currencies. President Xi Jinping declared that China should seize the opportunity and invest in blockchain technology. This short statement led to explosive results on both the stock market and Bitcoin’s market value.
It is still early to predict the crypto impact on geopolitical issues now that China pulled out a “Player 2 has entered the game” move. Nevertheless, there is a general understanding in the industry that Bitcoin will only increase its power in the financial market as a result.
So far, Japan is a country that is most prepared to introduce Bitcoin further into its economic system. The nation’s insatiable appetite for new technologies is in line with the rapid development of cryptocurrencies and blockchain-based innovations.
Japan even has an institutionalized framework that enables the functioning of cryptocurrency exchanges. Here, users can legally trade decentralized digital assets and use Bitcoin for various payments. The Payment Services Act (PSA) framework is what makes Japan the leading hub for crypto trading and exchange.
Germany is one of the European countries that invest heavily in cryptocurrency technology and the development of blockchain solutions. German citizens can own Bitcoin and trade these digital assets in worldwide markets. The fact that such a powerful economy embraces cryptos maintains a high level of trust in the technology behind them.
Canada presents itself as one of the most liberal countries in the world. However, when it comes to cryptocurrency acceptance the North American nation still has a long way to go.
The Canadian government started embracing the concept in 2017 by accepting Impak Coin as its first decentralized digital asset. Unfortunately, most of the banks in Canada prevent their clients from owning, using or trading Bitcoin or other cryptos.
Bitcoin and other cryptocurrencies in Russia have a similar status to the one that Marijuana has in the Netherlands.
By paraphrasing Pulp Fiction’s Vincent Vega, in Russia, Bitcoin “is legal, but it’s not 100 percent legal. It’s legal to buy it, it’s legal to own it, and if you are the proprietor of a crypto wallet, it’s legal to sell it. It’s legal to carry it, but that doesn’t matter, because, get a load to this! If you are stopped by the Russian Government in Moscow, it’s illegal for them to search you.”
As weird as it may seem, the Russian Government doesn’t regulate, support or control the trade and exchange of cryptos. In Russia, exchanges can operate freely, and Russian citizens can buy, sell or trade them at their own risk.
The Reserve Bank of India (RBI) prohibits its clients from buying, selling or trading any form of cryptocurrency. The Indian Government does not have a specific view on Bitcoin or blockchain-based decentralized digital assets. However, Indian citizens have freely entered the crypto market and some of them became staunch supporters of the technology.
Malta is not only a heavenly holiday destination for tourists but also a paradise for Bitcoin and other cryptocurrencies. The Maltese Government has passed laws that enable people to own and trade digital assets as well as initiate ICOs and smart contracts on blockchains that allow them.
For Holland, embracing cryptocurrencies is as easy as riding a bike. The nation’s financial system is so approving of digital assets that it even has an entire city dedicated to it. Arnhem proudly wears the nickname of “Bitcoin City.” There, users can engage in all the known forms of Bitcoin transactions in an entirely legal framework.
Belarus has a lenient policy towards Bitcoin and cryptocurrencies in general. Since 2019, the government has made Bitcoin legal together with a significant number of exchanges, ICOs, and blockchains that support smart contracts and DApps.
For a country that is still deep-rooted into the 20th-century economy, Belarus is making a giant and bold leaps towards a digital economic system.
How cryptocurrencies can reshape geopolitics
The US Dollar has led the financial system ever since the end of World War II. So far, the United States currency has faced little and feeble competition from its rivals. However, the advent of cryptocurrency can reshape the global financial system and geopolitical relationships in the process.
For example, Bitcoin can help countries like Russia, China and Venezuela who often have to deal with financial sanctions imposed by the US-led international community. By employing a flexible policy towards blockchain-based financial infrastructures, they can create alternative transaction platforms to the ones that use fiat money and outside of the jurisdiction and control of the US Dollar.
While the United States has regulations for Bitcoin, it fails to create a stable framework for its existence and trade similar to that of Japan. In the prospect of cryptocurrency innovation and development, this failure appears as a considerable weakness.
Changes in the financial global system take place when up-and-coming economies know how to take advantage of their rivals’ weaknesses. Now, the entire world is on the sidelines watching an All-Star basketball game between the overpowering US Dollar-led system and a mixed team of International enterprising economies.
Some European countries along with China, Japan and Russia seem to finally get a clear and open view of the hoop. Now, the ball is in their governments’ hands for them to score. Their availability to create a more flexible framework for Bitcoin and blockchain-based technologies may prove to be the winning point.
Featured image courtesy of Shutterstock.