Countries that see cryptocurrencies as an opportunity and others as a threat. Here are the pros and cons of welcoming digital currencies and which nations are the most favourable.
Although there are more than 10,000 cryptocurrencies in circulation, most of them move within a small circle of people, mostly gamers. And even the most commercial ones still cover a very small niche of the world’s population.
After the boom of the last few years, however, governments can no longer afford to consider digital currencies as an isolated market. And are therefore taking a stance to regulate this new market before it gets out of control.
Why are there conflicting positions towards digital currencies? What frightens those who adopt a defensive stance and what drives those who encourage its growth?
Table of Contents
The benefits of embracing cryptocurrencies
Cryptocurrencies have great potential both for the population and for a country’s growth. And in some cases can also become a tool for political propaganda.
In the US for example, mining is seen as an opportunity to create new, well-paying jobs in sparsely populated areas and directed at the uneducated.
Where the government’s growth perspective is not focused on the free market but on tight control of goods and services, then things change. In China, accommodating the crypto market had become unsustainable because the capital flight of China’s great wealthy had escaped state control.
In general, the nations that speak out in favour of the development of cryptocurrencies have concrete interests in their development. To make exchanges 100 per cent digital, to foster the international market, to increase GDP, and unfortunately also to be a ‘test country’ for testing the entry of digital currencies on a daily basis.
The disadvantages of accepting cryptocurrencies
What worries the countries that take a defensive stance against the development of cryptocurrencies are mainly the environmental impact generated by mining. Also, the serious scams and the lack of proper regulation.
Sweden has been against cryptocurrency mining from the start, arguing that Europe should intervene to ban this activity completely because the amount of electricity used is unsustainable. So have Denmark and Norway.
Hacker scams are still a big problem. Clearly, because the amount of unprotected money in circulation attracts scammers and hides behind anonymity most of the time. This, without suffering any kind of conviction because it is untraceable or not identifiable as a specific crime.
Europe’s position: the most welcoming countries
The most industrialised countries are perhaps the most complex and require very close attention to understand the significance of their stance. In Europe, for example, there are a number of factors that need to be considered. Including a nation’s level of digitisation and environmental regulation.
Portugal and Germany are among the most crypto-friendly countries. For years they have been pursuing internal technological development policies to accompany citizens towards digitisation.
In Portugal, there are also no taxes on buying and selling digital currencies. Which encourages trading and miners to invest in the country. Some argue that Portugal’s seemingly rosy situation is due to a lack of regulation that will soon be brought forward.
The American continent and cryptocurrencies
North America follows a very different growth process from the south of the continent. And this is also reflected in the crypto world. The US and Canada for example, are countries where cryptocurrencies are recognised. In some cases even by the banks themselves due to pressure from investors. Also, there are free and accessible digital media to educate citizens.
In Texas specifically, the crypto market has grown so much in the last couple of years because investors saw these arid and uninhabited lands as an investment opportunity to provide new jobs. And, to create cryptocurrency mining plants using in part energy from renewable sources.
Canada is pursuing new regulations that will allow the crypto market to grow. But, in a way that respects the environment and local communities. A path that seems to be unrelated to the political decisions of Latin countries.
Less industrialised countries such as El Salvador and Colombia have entered the tests. They will therefore encourage the use of digital currencies in order to analyse what dynamics are likely to be created by damaging young investors with dreams of stable and fast earnings.