As the rise of bitcoin and other digital currencies continue unchecked, most of the governments across the world are holding back on bitcoin regulations. Bitcoin is a relatively new concept that has the potential to replace fiat currency. The governments are probably taking time to understand and observe the evolution of cryptocurrencies by not hindering its progress with unreasonable regulations.
The advancements in computers and internet, along with growth in ecommerce is the driving force behind the emergence of digital economy. Governments are exploring ways to make a transition from conventional governance and economy to e-governance and digital economy. Evolution of these cryptocurrencies, which are independent of any state or person, are proving to be case studies for the countries that are looking forward to make a transition from traditional banknotes to digital tenders.
Going digital will help a nation in multiple ways. From reducing the cost and labor required to constantly print and maintain the circulation of currency notes in the market to combating money laundering and counterfeiting.
Counterfeit currency is one of the huge challenges faced by global economies. Circulation of counterfeit currency can end up damaging a country’s economy so badly that it may take years to repair. Along with the nation’s economy, its citizens will be forced to undergo financial hardship during the process.
Counterfeit currency is one of the ideal weapons used by hostile nations to undermine the economy of its rivals. It is not a new thing; this kind of proxy war on the economy has been in practice since ages. In recent years, the proxy war raged by Pakistan on its neighboring country India is one of the examples. Pakistan is allegedly printing and smuggling hundreds of million dollars in counterfeit Indian rupees into India each year.
As it is hard to counterfeit cryptocurrencies, countries can effectively eliminate the problem of counterfeit currency by adopting digital currencies similar to cryptocurrencies.