Crypto Restrictions: A Potential Humanitarian Crisis
With the recent news of the US treasury requiring crypto transfers above $10,000 to be reported to the IRS, and the possibility that China may restrict licensed companies from handling digital money in Hong Kong, some investors are worried that this could be the catalyst for a bear market.
However, to many people around the world, crypto is much more than merely an asset class, it is also a tool that helps them flourish and survive. If cryptocurrency was to get harshly restricted, it would be damaging the lives of millions.
Cryptocurrency and Quality of Life
In most Western countries, crypto is not treated as a necessity, but rather as an opportunity to trade, or as a store of value. However, for many in other countries, cryptocurrency is deeply significant because it directly improves their quality of living. For many, crypto is used as a fully-fledged alternative to fiat money—this is especially true in locations where fiat has proven faulty, either due to governments mismanaging it, pressure from other countries, or poor financial infrastructures.
Take, for example, this perspective from somebody born in Nigeria– in countries where inflation rises at unsustainable rates, where your bank account can get suspended for engaging in protests, where payment gateways such as PayPal are blocked, cryptocurrency is a godsend.
The ability to send, receive, and store money entirely outside of government regulations is an extremely liberating thing—especially if you’re in a country where banking fees are huge, and you have to face a two-digit inflation rate every year.
In places where fiat is heavily controlled and mishandled by the state, cryptocurrency has become more than a financial tool—it has become a way of life. An article from Bitcoin Magazine drives this point home, urging Westerners to “check your Bitcoin privilege” and think twice before criticizing its existence. The author writes that:
“Critics in the dollar bubble miss the bigger global picture: that anyone with access to the internet can now participate in Bitcoin, a new money system with equal rules for all participants, running on a network that does not censor or discriminate, used by individuals who do not need to show a passport or an ID and held by citizens in a way that is hard to confiscate and impossible to debase.
While Western headlines focus on Coinbase going public, Tesla buying billions of dollars’ worth of Bitcoin and tech bros getting fabulously rich, there is a quiet revolution happening worldwide. Until now, governments and corporations have controlled the rules of money. That is changing.”
For thousands or even millions, cryptocurrency is needed to access healthcare, food, clothing, and other essentials. In locations where governments actively block bank accounts for stepping out of line politically, fiat is used as a weapon of oppression.
Crypto has Saved Lives
In places where fiat runs relatively smoothly, it can be easy to forget that crypto is more than an instrument for trading. In the media, crypto is mostly portrayed as something to invest in, or something to make a passive income off. Rarely do perspectives from other regions get the necessary attention.
By focusing exclusively on market activity, people miss the bigger picture. Cryptocurrency is a decentralized alternative to fiat that is borderless, permissionless, and running entirely autonomous to governments. It is a means of economic freedom.
For those who are unbanked, and underbanked (meaning they either have no bank account or their bank account feels unusable due to external forces) crypto is a way of living. It helps them to gain an economic footing and climb out of poverty.
Of course, this is not to say that crypto cannot be criticized. Concerns around energy consumption should definitely be had, but it must be remembered that crypto’s energy consumption is also helping others survive.
A study from Galaxy Digital, which calculated Bitcoin’s energy usage compared to traditional finance, made an extremely important point of asking whether Bitcoin’s usage is justifiable. They pointed out that Bitcoin provides “financial freedom to people around the world without the luxury of stable and accessible financial infrastructure”.
In the West, we debate whether crypto will ever replace fiat, in some countries like Nigeria and Venezuela, it already has. And with projects such as Ethereum priming themselves up to become environmentally friendly, it looks like the future of crypto will serve the planet as well as it serves the people. Cryptocurrency has always had a humanitarian core, aiming to help lives flourish, and that sentiment will now be expanding to nature.
Restrictions Will Never Stop Bitcoin
Governments may threaten to block Bitcoin, and some may put harsh restrictions in place, but the fact of the matter is that they are unable to actually stop it. There is no way of preventing a blockchain from running because they are decentralized, meaning governments cannot simply turn them off because they are distributed worldwide.
Wallets cannot get blocked like bank accounts because they are cryptographically secure and independent. And with privacy coins, organizations cannot even monitor usage.
Consider the words of David Rubenstein, Chairman of the Smithsonian Institution. In an interview with CNBC he said that “The idea that cryptocurrency is going to go away or that the government is going to stop cryptocurrency from being something investors want is unrealistic at this point.”
It is hard to say what the future holds for cryptocurrency, either in terms of its market activity, or its government restrictions. However, it must never be forgotten that this is more than an economic toy; it is a deeply significant tool used in many people’s lives.
What impact do you think the recent restrictions will have on crypto? Let us know in the comments!