Bitcoin is the first virtual currency to exist in the digital market. After bitcoin, many currencies have come into existence with the same priorities as bitcoin provides to its investors. Bitcoin is the first non-centralized currency to exist in human history that is said to be based on the peer-to-peer payment network. The currency is brought to use by its investors only to trade without any restrictions on the part of the government.
The question is why governments are not ready to give it a green flag for universal acceptance? The answer is because the government gets out of the race while handling our money on cryptocurrency platforms.
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HOW CONVENTIONAL MONETARY SYSTEM WORKS?
The currency that we use in paper form is known as fiat currency or conventional money. This money is controlled by the governments of the respective countries in the form of a Central Bank. The central banks are the highest authority that controls our money and makes up the monetary policies to exercise their influence on the circulation of money in the market. This is done to keep track of the illegal currency mining, illegal activities carried through the money and so many other things.
But why do we trust this system? The answer is because it possesses a central control exercised by our governments. The paper money that we brought to our use is assured to us as valuable by the government in the form of a promise. There is a promise written on the money for being assured by the specific authority on behalf of the government to make it in use for various uses in our lives. If you want to invest in bitcoin, then you can go to The Ethereum Code site and start your trading journey.
The money that we use further for various aspects of our lives is paid back to the government in Taxes. Further, the government also has control over the circulation of currency in the market to control inflation in the market. That is how this process goes on and on.
HOW CRYPTOSYSTEM WORKS?
Unlike the physical currency, there are certain things that cryptocurrency has to provide that makes people invest in it. Because physical money fails to provide all of these things because of the pressure it has from the government’s side. First of all, cryptocurrency does not have any outside control like the central bank or the government. There is a blockchain technology that exists to facilitate its functioning. The blockchain is a series of blocks that are formed through the mining process that miners do through their computers.
This mining does the validation and the verification of the transactions. These transactions after going through a complex process get stored inside a block. Block contains inside it the data related to the transaction, hash of the past and the present data. All this process is done through the miners who get rewards for mining any coin and helps in circulating the coins in the market so that the new generation keeps going. All this process is protected through the cryptographic features that make cryptocurrency a reliable platform for investing.
REASONS FOR RESTRICTIONS
Certain reasons for restriction on using cryptocurrency can be that people escape from paying taxes, some crimes take place if an uncontrolled system is working like prostitution, money laundering, immoral trafficking terrorism etc.
CONCLUSION
Hence, we can conclude about the working of both the conventional and the new system. No doubt there might be some rise in crime but even then, controlled paper money has also not been able to wipe it out completely. Crypto provides possibly more protection than any government that too with your control.
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