When Governments Have No Other Choice Than Crypto

Cryptocurrencies have divided the world. There are individuals involved in crypto and there are skeptics or non believers who don't. This is true on a governmental level as some countries know crypto is the future, trying to integrate it in out life, while others are fighting it with bans, adopting laws punishing those who are trading.

No one knows what the future holds for us, no one knows exactly how cryptocurrencies are going to influence our life in the future. The only certainty is that it can't be stopped, can't be depreciated or eliminated.

Cryptocurrencies volatility is a concern to many, it's not like fiat that can be manipulated by any government as they please. Printing crypto like they do with fiat is also not possible. Regulating crypto is what some countries do in order to be able tax crypto earnings. Other countries that don't have control over people's tax return, where usually cash is used the most, are banning crypto. The latest country is Nigeria for example.

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Image by WorldSpectrum from Pixabay

Governments are not fighting only with ordinary people, their own citizens. They are fighting with other governments, central banks and institutions are competing against each other in a war called Crypto vs CBDC. Right now only crypto is live, CBDC is still in testing phase in a few countries, while others are just studying the possibility of swapping cash with digital currency, but the concerns are real.

We know countries where citizens have no other choice than to turn into crypto, due to the poor economic situation. People become content creators to earn crypto, that can finance their daily needs and this way they can make ends meet. Venezuela, Nigeria are two countries in this situation. But what if the government is forced to look for alternative solutions too?

Iranian banks have been disconnected from the global platform that enables banks to settle cross border transactions since 2012. This platform, SWIFT (the Society for Worldwide Interbank Financial Telecommunications), is under the jurisdiction of the EU and it was because of sanctions that Iran entities were disconnected. source

In recent years, both the Iranian government and regular citizens have sought to leverage cryptocurrencies to engage in international commerce without having to rely on the U.S.-dominated banking system – a system that in recent years has been shut off to Iranians because of sweeping U.S. economic sanctions. Isolation from the global financial system, inflation, low growth, and an overall poor economic situation have pushed Iranians to dabble in cryptocurrencies as an investment asset and a method of payment. source

This is a specific case in which the government had no other choice than to turn to Bitcoin to be able to engage in international commerce. The country is trying to make crypto mining a source of income for the state, becoming an important piece of the crypto puzzle. During 2020 it contributed almost 4% of the global bitcoin hashpower. This doesn't mean mining is easy in Iran as there are strings attached for non governmental miners but that's another story.

Iran is not alone in this, the Belarusian government is also exploring the potential of moving into crypto mining.

The Belarusian government has been exploring the question of crypto mining for a while. In April 2019, President Alexander Lukashenko reportedly proposed to deploy excess energy from the country’s first nuclear power plant to mine cryptocurrencies and sell them. source

Unlike Iran, where mining has been causing power shortages, not to mention heavy pollution as lack of investments in the energy sector forced the country to use highly polluting fuel oil, Lukasenko wants to use nuclear power.

European Union foreign ministers agreed on Thursday to push ahead with a new round of sanctions on Belarus including on Belarusian companies, in response to state repression of pro-democracy protests, the EU’s top diplomat said on Thursday. source

The European Union is not the only one imposing sanctions on Belarus. Canada also imposed sanctions against Belarus last year in October, for gross and systematic human rights violations. Others may follow as what is going on in the country is unacceptable. The situation is not as critical as in Iran yet, but Belarus is right in looking for alternatives before the inevitable happens.

The latest to join the party is Pakistan, the country that is planning to set up 2 state-owned Bitcoin mining farms to help boost economy.

Ziaullah Bangash, advisor to the chief minister of KP on Science and Information Technology, said the provincial parliament passed a bill allowing the KP government to use its own money to establish the mining facilities.

According to Bangash, the KP Assembly also passed a separate no-objection certificate allowing individuals to mine cryptocurrency and issue their own digital assets. The development coincided with the launch of a private bitcoin mining farm by Waqar Zaka, a long-time crypto enthusiast who has worked to develop the Pakistani crypto industry. source

It's a start for Pakistan and a good example for the rest of the world, but the county still has to find a solution to its electricity shortages.

These cases clearly show how countries are forced to mine Bitcoin either because of international sanctions and threats, or to boos the economy that is struggling or it's already dead. There's a good reason they are turning to crypto, they don't have any other alternative.

The way I see it, this definitely good, it's a start and other countries may follow. Institutions buying Bitcoin lately helped a lot in this regard. The more join the party, the better for the future. Sooner or later crypto will be accepted, without being converted into fiat. Sooner or later crypto is going to win.


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