Introduction

Decentralized innovations and the government are logically incompatible. If you simultaneously consider the state to be a useful, viable public institution and blockchain to be valuable tech, then you are fooling yourself. The state is a hierarchical system of trusted third parties, while decentralization is an attempt to exclude unnecessary intermediaries—all financial institutions and government agencies—from the system.

Now more than ever, the implementation of decentralized systems in the real-world economy has become a hotbed of conversation and the main driver of banking, personalized medicine, insurtech, and social media development.

In some crypto-friendly countries, operations with virtual money are officially allowed. Crypto is usually considered a commodity or an investment asset and subject to the relevant legislation for tax purposes. At the same time, some states have publicly banned the use or exchange of cryptocurrencies in their economies. Surprisingly, these countries are leaders in the field of trade and technology, and they are not happy with the recent surge of interest in tokenization services. The most striking example is China, which has prohibited all types of crypto exchange and ICO.

Another giant that has generally forbidden digital gold is Russia. This particular case of opposition to crypto is unique because of the reason why it is denied at all. Instead of using virtual assets as a tool to fight corruption and other abuses of power, crypto-payments are banned in Russia. Why? Because they violate the law prohibiting “the introduction of other monetary units and substitutes for money.” Many financial experts consider this taboo to be a way for Russia to implement a state-owned digital currency. However, the main reason lies in the fact that Big Brother can’t follow decentralization.

Thailand, Taiwan, and Zimbabwe have completely banned BTC, as well. The reasons range from fear of corruption to direct violations of national laws. Still, they continue to enact laws aimed at further monitoring and regulating the ban on cryptocurrency. In the meantime, they are open to creating their own national digital currencies supported by the government.

With all this in mind, let’s answer a simple question: Why are governments and centralized financial institutions so firmly opposed to decentralized solutions?

Is Total Control of Society Always a Good Thing?

Let’s take a walk down memory lane. In 1933, Roosevelt signed the Agricultural Adjustment Act. According to the government’s logic, agriculture could be saved by raising the price of its products. The reason for the low prices was thought to be oversupply, so it was agreed that the government would pay subsidies to farmers for reducing their farms, which led to the destruction of crops and livestock. The authorities burned food surplus, poisoned it, or buried it in the ground.

It is hard and even impossible to judge whether these measures helped overcome the crisis. This topic is still controversial. The market mechanism should have provided for the reduction in agricultural production and the change om farmers’ activities without government intervention. However, farmers’ incomes actually increased due to the strict measures.

This policy was very unpopular among the starving population. Fair enough. The government could have donated the extra food to the needy instead of dumping it. We don’t know what you think, but for us, that “prudent move” was a loser.

Present-day farms constantly suffer from centralized regulation. Due to the labor shortage, which was triggered by immigration rules, fruit on trees keeps rotting away. This situation is essentially the state bossing it citizens around: “You do this,” or “You must do that.” It is determining how farmers can use their private property and who they can or can’t hire. If only farmers could behave as they please, sell food, or provide jobs to whoever they want. If only people could look for work without fear that their families will wind up in jail for crossing an arbitrary, non-private property boundary called the “border.” But that would be decentralized chaos.

Yet another instance of decentralized chaos “illegal charities.” In the US, a World War II veteran was arrested for giving food to homeless people. Arnold Abbott faced 60 days in prison and a $500 fine for violating the city’s law about feeding the homeless in a public place.

All these cases m demonstrate that the centralized system will never be able to identify the market calls of individual economic entities and their needs. Worse still, they just don’t want to. Obviously, it is important for all governments to keep absolutely everything under control. This approach prevents many problems, such as anarchy, social unrest, danger to the rule of law, and so on. However, it is a big vicious circle impairing the enjoyment of human rights.
Instead of trying to make each and every sphere ideal in the authority’s view, all the necessary conditions for the well-being of society must be put in place first. That’s a matter of concern for the state.

Decentralization Is Here

The US market is both a dream and a nightmare for any startup. Many people set up their head offices there but use completely different companies to conduct ICOs and issue tokens in those jurisdictions where the crypto activity is welcome. Companies registered in other countries (including overseas) limit the participation of American citizens and residents in token sales. This is no doubt that this situation is connected to securities and stock market legislation, as well as with the activities of the regulator represented by the Securities and Exchange Commission (SEC).

In contrast to the vague policy of the USA, Europe has quickly created regulatory bodies and adopted laws managing the new financially technological industry in its infancy. Biggies in innovative technologies, such as Malta, Italy, Switzerland, Denmark, and Estonia, are among the top European countries loyal to the blockchain solutions, BTC, and other virtual coins. Furthermore, they stress the importance of building a crypto-oriented economy.

Some countries where blockchain is more closely intertwined with daily life have already adopted laws encouraging the growth of this innovative technology and new rules that require transparency of information and data sharing for markets and government institutions.

Still, there are several major hurdles that need to be overcome. For example, there is no specific regulation of virtual currencies. Operations with BTCs are considered the same as payment transactions with coins or banknotes, but Bitcoin is not recognized as a taxable asset. At the same time, there is nothing more irritating for regulators than Bitcoin ATMs. Law-enforcement agencies in Germany consider operations with internet cash (in particular, Bitcoin ATMs) to be a weak link answering the door for money laundering gained through illegal means.

Final Words

The government wants to regulate cryptocurrency for the purpose of maintaining control over trade and industry, as well as to collect extra taxes. (We’ll spare you the other less significant reasons.) But experience has proven that the evolution of technologies is impossible to stop. In the near future, BTC will do to money what email has done to the postal service. It’s the game-changer in the world of technology, leading to a revolution in industry.