For cryptocurrencies, the months of April and May have been a whirlwind. Take, for example, Bitcoin, the most widely used cryptocurrency. Its price reached an all-time high of $64,863 on April 14th. It had dropped by more than half to $30,682 by the 19th of May. It was worth $37,270 at the time of writing. China’s talk of tighter crypto legislation to protect its financial system fuelled the fall.
Governments, through central banks, have had the sole authority to create money until now (by printing it or issuing it digitally). They won’t be sitting around doing anything while crypto entrepreneurs try to come up with newer forms of money. This helps to explain why some of the world’s most powerful governments are taking action against it.
Governments also object to the anonymity of money. The history of money tells us that while different forms of money emerge privately, it is the state which usually controls the monetary system. It will continue to be in demand as long as taxes must be paid in government-backed fiat money. In addition, cryptos are likely to be regulated by an increasing number of countries in the coming years.
