There have been a lot of big news stories about cryptocurrencies, especially Bitcoin, in the last year. Currencies that are managed using blockchain technology are becoming more and more widely accepted and known about, and there are certainly more than a few people now wishing they had gotten involved in them earlier! Cryptocurrencies have also started to be traded in a similar way to conventional currencies.
Some Governments Mistrust Cryptocurrencies
In order for cryptocurrencies to become widely adopted, and integrated into economics on a serious level, it would require policymakers to become properly comfortable with the concepts. At present, this isn’t really the case, with even some of the countries that were big early adopters of cryptocurrencies on a popular level like South Korea seeing the potential for things to go badly wrong, and warning the population not to go all in with things like Bitcoin. Some governments have an even stronger dislike of cryptocurrencies, for instance there has been a long running war between the Federal Bank of China and the Bitcoin industry, and cryptocurrency brokering isn’t legal in every country.
This reticence is likely because, as in many other fields, technology has advanced faster than the understanding needed at a policy making level to make good decisions about how to best leverage it. Making economic strategies that include cryptocurrencies is going into untested waters for governments, and this is not something that risk-averse economists would ever advise, even if it does open up some exciting possibilities.
Businesses Could Reap Rewards
However, economics is only managed by governments – it is driven by businesses and consumers, and in many cases, cryptocurrencies have a strong appeal to these. Regulatory issues can, however, make it difficult to launch complex business structures that could really make the most of cryptocurrencies, and this is where the fact that laws and regulations all over the world don’t yet really know how to handle cryptocurrencies causes obstacles. There is, for example, a lot of potential for groups of nations that trade together a lot but have different currencies, such as Caribbean island nations, to streamline how they do business very significantly by making better use of blockchain and cryptocurrencies, because this would cut out all of their local currency conversion headaches when trading. While there is a long-term initiative to do this in the Caribbean, supported by various local banks, technology companies and governments, it is a very complicated thing to implement from a legal point of view and this will mean it will be a long time before the businesses and customers will start to see the benefits of technology that actually already exists.
Countries Benefiting from the Crypto Industry
In other countries, governments and businesses are getting involved in the industry itself and creating jobs and boosting their own economies. A good example is Norway, who have something of a boom in cryptocurrency data centers. However, just because these countries want to build expertise in the growing industry, doesn’t necessarily follow that they would support other types of investment into making cryptocurrencies have a more significant presence in the mechanics of the global economy.
As you can see, there are some deep seated and difficult issues that are likely to mean that if cryptocurrencies do ever even begin to become a major economic force, it will take a lot of work to get there.