Has the time come for governments to recognize cryptocurrencies?
Governments: They see bitcoin as a direct threat to their ability to control finances and influence monetary policy. Crypto assets were created with the explicit purpose of keeping them outside governmental control. Hence, the unease of any government is obvious.
Crypto assets are still at a very nascent stage and cannot be used as a currency due to its volatility and thus its very limited acceptance by businesses as a medium of exchange. Most governments want to confine them to niche use. Thus, there was hardly any patronage from institutional investors.
With spot bitcoin ETFs, institutional money will flow into cryptos and cement its position as an alternative asset. Crypto asset uptake: Retail investors have been enthusiastic about crypto assets primarily due to its potential for high returns. Crypto assets are by design made scarce to avoid the typical problem of debasement, which fiat currencies experience due to unbridled printing of currency.
The younger generation, between 18-35 years of age, constitute the bulk of investors in cryptos. Digital assets and their non-tangible nature do not deter them. They see this as a legitimate asset that can deliver excellent returns.
They even feel that the current financial system is rigged and works against their interests which impels them towards cryptos. Crypto assets will gain more traction when fiat currency debasement happens. With the kind of debt that governments are running (for instance, the US has a debt of $34 trillion on a $24 trillion economy), such debasement is to be expected.
Read more on livemint.com
