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Bitcoin is just as vulnerable as fiat currencies

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4 Reasons Why Bitcoin Will Fail as a Currency

Bitcoin is just as vulnerable as fiat currencies

Bitcoin is just as vulnerable as fiat currencies
CONTENT

  • Cryptocurrencies are also dependent on government decisions, just like fiat money

  • Centralized exchanges must comply with legal requirements

  • Decentralized exchanges can be an alternative, but not a solution

International consortium of news organizations developing transparency standards.

Cryptocurrency was conceived as an alternative means of payment that would be, by its nature, decentralized and independent. The idea of ​​such digital money seemed attractive, and the crypto coins themselves were invulnerable and promising. And all this time, the state treated bitcoin as a frivolous threat to fiat money, so the circulation of cryptocurrencies was not regulated in any way, but it was not subject to a strict ban..

Bitcoin is just as vulnerable as fiat currencies

This behavior of world leaders has instilled in crypto enthusiasts confidence in the value and power of bitcoin against fiat money, the issuance and circulation of which is strictly controlled by the central banks of the countries. However, do not delude yourself: bitcoin is as vulnerable as fiat money..

This idea was expressed by experts of the Ultranet blockchain market. According to experts, although cryptocurrencies are indeed decentralized means of payment, the holders of the same bitcoin choose centralized exchanges such as Coinbase or Gemini to store and perform transactions with coins. At the same time, these companies operate in the legal field and received a license to carry out operations under certain legislation. It is worth violating it at least once, as government services will prohibit the operation of the site or completely eliminate it. Therefore, it does not matter how decentralized Bitcoin is by nature, if it revolves on centralized exchanges, the work of which directly depends on the decisions of the government..

As the authors of Ultranet say, the US and EU countries are very dependent on their own legislation and force the companies that operate on their territory to also follow the accepted norms. In order to prohibit the activity of a cryptocurrency exchange, one order of the Senate or government is enough. And if in America the question of banning cryptography has already been raised, then digital currencies are indeed at risk. If the US government decides to ban the activities of exchange platforms, then the use of cryptocurrency will lose its meaning, since:

Bitcoin is just as vulnerable as fiat currencies

– it will be impossible to exchange digital coins for fiat money;

– exchanges will not be able to convert some crypto coins to others;

– holders will be forced to switch to self-service cryptocurrency, and without the necessary technical knowledge, it will be impossible to do this.

Decentralized platforms can become an alternative to centralized exchanges, but even here it is not so simple.

Decentralization is a solution, but not a panacea

 

Indeed, decentralized blockchains like Bitcoin or Ultranet can be a way out. In fact, national governments cannot influence their work or prohibit their use. But another problem arises here. As the specialists of Ultranet explain, the use of blockchain can be banned using invasive methods that are quite consistent with the capabilities of the government of developed countries. The problem is that cryptocurrency nodes are initially connected to each other. In other words, when a Bitcoin or Ultranet node is loaded, it must be aware of other nodes on the network that it can communicate with in order to receive the latest updates. To access the nodes, the blockchain needs a list of all available IP addresses, with which communication takes place. The government can easily obtain such a list and prohibit the use of active IP addresses. This will disable the entire blockchain. For example, the Tor browser was banned in China in the same way, and its developers still have not solved the problem..

So, as Ultranet studies show, bitcoin and other cryptocurrencies are not completely independent and can be banned or destroyed altogether if the governments of the countries seriously want to do it..

Disclaimer

Bitcoin is just as vulnerable as fiat currencies

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