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Does economy involve cryptocurrency

The cryptocurrency issue is already heating up six months into 2022. With proposals for regulation producing a schism between governments that are “crypto-friendly” and those that aren’t. So, which factor will influence the market’s future, how to invest in crypto, or should we buy crypto?

Is it better to ban cryptocurrency or to be crypto-friendly?

Trading in cryptocurrencies is under veto in China on several occasions. Last year’s outright ban on crypto mining was a huge setback for the industry. Given the majority of crypto mining took place in China.

Mining is the process of solving cryptographic algorithms using software on computer servers. This mechanism verifies transactions and keeps a shared record of them across the whole blockchain network. The “miners,” or those who participate, are automatically paid in cryptocurrency.

Mining is a global industry. And significant sums of money are spent on land, power, and infrastructure to set up mining warehouses.

Miners were compelled to sell or ship their equipment outside and invest in more friendly jurisdictions. Mainly the United States, as a result of China’s mining ban. The strengthened network  is a result of the diversification of mining operations. As a result, future prohibitions may have a smaller impact on the market.

The majority of Bitcoin mining now takes place in the United States, Kazakhstan, Russia, Canada, Malaysia, and Iran. Some networks suffer significant difficulties. For example, power has been rationed away from miners in Kazakhstan to conserve energy amid electricity shortages. Prompting miners to flee the nation.

According to reports, Kazakhstan’s economy will lose US$1.5 billion (A$2.14 billion) over the next five years as a result of this. Including US$300 million in tax revenue.

Cryptography isn’t completely anonymous.

Since the initial introduction of Bitcoin in 2009, crypto has gone a long way. There are thousands of cryptocurrencies presently, with a total market capitalization of US$1.66 trillion (about A$2.36 trillion).

The anonymity of cryptocurrencies is frequently highlighted, including in a recent study by Russia’s central bank, as enabling criminal conduct such as money laundering, terrorism financing, and drug trafficking.

This isn’t completely accurate. In fact, the history of transactions on public blockchains like Bitcoin and Ethereum (the two largest by market capitalization) is open to the world.

Many countries, notably Australia’s and the United States’, work with huge private blockchain analytics corporations to keep track of individuals’ crypto wallet addresses and transactions. This is done to reduce the chances of money laundering and tax evasion.

Future directions will be determined by policy.

As an economic asset class, technological infrastructure, and a social experiment in non-state-based infrastructure, cryptocurrency is becoming more widespread.

As a result, crypto communities are gaining more clout in public policy debates. Last year, for example, crypto proponents were able to stall a significant federal infrastructure bill in the United States.

Yet, when it comes to policy and legislation, different jurisdictions take different paths. China and Russia, for example, see it as a fiscal and ideological threat to national currencies. Others see it as a chance for innovation, investment, and economic development.

As diverse ideas emerge, 2022 might be a watershed moment for the crypto business and those vying to ban or welcome it.

Countries that encourage crypto networks have reaped economic rewards in the form of innovation, investment, jobs, and taxation in the past. Access to new demography and technological efficiencies in treasury management are two business benefits of embracing crypto as a digital asset.

At the same time, the industry’s influence on policy and legislation show that cryptocurrency isn’t a wholly decentralized entity that exists just on the blockchain.


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