Why people trust cryptocurrencies despite being unregulated?
For all who are no interested in the concept of centralized economy (which most are not interested but forced into), the concept of cryptocurrency is a blessing. Cryptocurrencies are accepted worldwide, are easy to store and transfer, and offer such a wide variety of features that it would be difficult to list them all out here.
Stable currencies like the US dollar or Japanese yen, for instance, offer more stability than cryptocurrencies do but at much lower convenience. Nevertheless, despite the fact that cryptocurrencies are unregulated, most people prefer them to traditional currency.
Why do people trust cryptocurrencies despite being unregulated?
It is true that cryptocurrencies are not backed by assets or commodities in the real world. Regulatory frameworks have not been created for entirely intangible things until now. As a result, there are no models for a framework like this. But the main reason why people love cryptocurrencies is their decentralization.
Unlike the [](traditional banking system), cryptocurrency is not controlled or managed by any governing body. It's a few lines of computer code that nobody has control over. This means that nobody has the power to single out an individual user and take away their assets or steal money from them by changing transactions.
Cryptocurrency also offers a lot of features that are not available in the traditional banking system such as instant conversion between fiat money and cryptocurrencies, easy-to-use mobile apps, the ability to exchange money at any point in time, anonymous transactions made possible by mixing techniques (wherein one user can make it appear that another user paid him), etc.
It is no surprise that people choose to invest in something that they can invest in without having to apply for a license, pay taxes or give out personal information. Also, given the unstable economy at the moment, a lot of people have lost trust in traditional banking systems and large corporations are charging higher interest rates. As a result, they are more likely to go for cryptocurrencies.
Nevertheless, governments and central banks around the world continue to warn their citizens against investing in cryptocurrencies. Besides being unregulated, cryptocurrencies are also viewed as [](being highly volatile). It's possible for them to drop drastically overnight just like traditional currencies do. It has been described by some as "digital tulip mania. But this concern of governments seems more of a worry for themselves and not for the citizens.
Governments are more worried about the power of citizens than they are with the power of cryptocurrency. The success of cryptocurrencies will not be determined by how stable they are but how much they grow. If a government thinks that it's going to cause problems because it cannot control its citizens then they should just do away with cryptocurrencies altogether, because in that case citizens would just invest in traditional currencies instead.
Why governments can't ban/block cryptocurrencies?
Cryptocurrencies are nothing more than computer code, and that cannot be prohibited. Transferring cryptocurrency from one wallet to another is similar to exchanging music on a USB drive, thus a legislative prohibition will not prevent people from sending cryptocurrency to one another. Cryptocurrency is not centralized, hence its users are scattered in various parts of the world. This is different from the financial institutions that are concentrated in a particular area and can be shut down relatively easily.
Investing in cryptocurrencies can be done anonymously because a lot of cryptocurrencies do not require you to verify your identity. The government cannot exactly prevent its citizens from doing something that they have the freedom to do. They would need to ban a number of things just because it relates to cryptocurrencies.
These facts add the feeling of security among the crypto consumers and the fact that cryptocurrencies are unregulated adds the feeling of freedom.
The Current Market Crash and its influences in the future of Crypto
This is May 2022, the time this article is being written. And currently, cryptocurrencies are crashing, causing a panic among the audience. Bitcoin has lost 50%+ of its value after hitting an all-time high around $68,000 on Nov. 10, owing to rising inflation, a sluggish employment market, and the Fed's continuous signs that it will begin winding down aggressive measures to boost the economy.
While these crashes are painful for a lot of crypto investors, it is also the best possible time for new entries.
Bitcoin and Ethereum have shown tremendous potential to disrupt industries such as banking, advertising and Retail, which is the reason why crypto has a potential to pick itself up from any fall.
This is probably the best time to start investing in cryptocurrencies and blockchain technology.
To conclude,
Now that you have read this article, you should be a lot more informed about the cryptocurrency and its potential in the future. Cryptocurrencies are here to stay, and if everyone starts thinking more outside the box, then there won't be much that can stop them from becoming mainstream. Even though they are unregulated, people will continue to invest in them because they trust them more than government-backed money or regulating bodies. It is our duty to keep pushing for the decentralization of financial system and cryptocurrencies are a great stepping stone in that direction.