INTRODUCTION
Lately, cryptocurrencies have witnessed a tremendous value hype and increased usage and have attracted and inspired a lot of people to know and participate in it. The most important reason for the surprising rise of cryptocurrencies can be their unregulated nature.
Cryptocurrency, especially Bitcoin is now Gaining impact on the global economy market without any regulations, for which several policies need to be implemented for its controlled and legitimate usage.
CONCERNS OF UNREGULATED GLOBAL ECONOMY
With the increase in popularity and demand of cryptocurrencies, the unregulated person to person transactions may result in a threat to financial systems. Cryptocurrency networks have a lack of regulations unlike all other monetary systems and are decentralized in nature. This feature of cryptocurrencies is often misused by fraudsters to evade their taxes and launder money. In order to prevent such activities and use this growth by providing protection to both customers and investors, a regulated framework can be established to avoid such disruptions.
EXPONENTIAL RISE IN RISK
Just like the traditional financial system, the crypto economy is also prone to several systematic risks. In case of cryptocurrencies, when any transaction takes place, it traverses through a peer-to-peer network and after validation at each node it becomes a part of the large blockchain. This feature makes them more interconnected in nature. The blockchain property ensures openness and availability of cryptocurrencies to everyone.
But if several regulations are imposed on cryptocurrencies, this would result in the separation of cryptocurrencies into several architectures based on their functions. This would lead to tokenization of several traditional assets reflecting and enforcing real-world regulations and using blockchain feature to its full potential for strong growth in their nature.
People are now using the rise of Bitcoin value as a medium of their long-term investments in order to get higher returns in the future. If the rise in usage of cryptocurrency will replace the use of traditional economy, this would have an alternate effect on cryptocurrency as well. With contraction in the traditional economy, people would retrieve their invested money thus reducing their usage in form of cryptocurrency and leading to the decrease in their usage and value.
THE NECESSITY OF THE CRYPTO-POLICIES
The blockchain technology used by cryptocurrencies allows it to self-regulate without any external jurisdictions. This blockchain property makes it decentralized, transparent and accessible to every individual. But this decentralized feature is also prone to many outside unauthorized security threats making cryptocurrency insecure. A mutual mixture of real-world regulations with the blockchain enforced encrypted code can actually help the transactions to be more secure.This approach can enforce built-in governance with the cryptocurrency and let everyone participate in it more securely.
Real world rules and regulations can be introduced with the programming code of the blockchain and make each transaction more authorized in each of its aspect. One such example can be given of New York’s BitLicense program in which certain real-world regulations were enforced and incorporated into Blockchain transactions. Such revolutionary policies can make a great impact towards the regulation of the global economy of cryptocurrencies and ensure secure transactions globally. It can ensure the removal of anonymous transactions which often led to money laundering and eliminate tax evasion activities.
CONCLUSION
With high popularity and participation of people in cryptocurrency, the fraudulent cryptocurrency transactions are also picking up the pace all across the globe. It is now a crucial time to reduce the gap between the traditional and crypto economy for creating a safe and fair future for the cryptocurrencies. Enforcing proper regulations with cryptocurrency can definitely ensure high security blended with its efficiency and high return generating properties. With enforcement of the required regulations, Cryptocurrency can definitely turn from digital gold to secured digital gold in future.
