The concept of cryptocurrencies and their underlying technology has made many countries curious about their future applications. While many people buy Bitcoin and other cryptocurrencies for investment purposes, blockchain can be used for a myriad of reasons.
In this article, we take a look at the benefits of countries that choose to adopt cryptocurrencies and the countries that are already exploring their possibilities. After reading this post, you should have a better understanding of the geopolitical significance of cryptocurrency.
Why countries would want to adopt cryptocurrencies
For most people, cryptocurrencies still seem like a futuristic concept that has no inherent value. This couldn’t be further from the truth. At the moment, our economies are undergoing multiple changes thanks to pandemic-related lockdowns. Money printing causes a spike in inflation rates and banks have decreased their interest rates to nearly zero.
Cryptocurrencies, and more specifically Bitcoin are the safeguard against an economic collapse. Certain institutions already understand it. Several publicly listed companies are allocating (parts of) their cash reserves into cryptocurrency to protect themselves from the enormous decrease of value that the US dollar is about to undergo in 2021.
Since the US dollar is tied to every other FIAT currency, countries have also started to consider the possibility of buying Bitcoin as a reserve asset. If this occurs, it would be similar to the way central banks are currently storing large amounts of gold in case of a financial collapse.
The countries that are the first ones to make such decisions are going to become the superpowers of tomorrow. After all, the asymmetric risk-reward potential of Bitcoin could help them grow faster than any other time in history.
Are any countries already taking notice?
Absolutely! There are several areas we can look at when discussing the adoption of crypto.
- There are numerous countries that have loose regulations on crypto and support it as a store of value and means of exchange. You can find out more about this here.
- There are also several countries that are using their energy reserves to mine cryptocurrency. Among them is also Venezuela, a popular example of what we could see if the current rate of inflation continues to grow. You can see a list of these countries here.
- Next, we also have countries that are currently building their own blockchain-based currencies. These are FIAT currencies built on blockchain technology that is centralized and similar to stablecoins. China is a popular example of this, as they are already testing digital Yuan with much success.
- Finally, while there is not much information available on the web, we do know that there are several countries looking into the possibility of buying Bitcoin. This could be done in a way that does not affect the market’s volatility, and these countries will most likely keep the information private for as long as possible.
Of course, there are also countries that are sceptical and even worried about cryptocurrencies. At the time of this writing, there are several countries that are hindering the growth of crypto and blockchain technology by banning it (completely or partially). You can see a full list of these countries here.
The stance of the US government
The United States is not very welcoming to the idea of a decentralized future, since they impose strong restrictions and regulations on pretty much everything related to finance. While cryptocurrencies can be obtained and traded in the US, taxation is extremely high, and many platforms are inaccessible from their local servers.
An example to illustrate this is Binance US, a subdivision of cryptocurrency exchange Binance which operates solely in the US and has a very limited number of cryptocurrencies. Other platforms that support crypto transactions are collaborating with the authorities to ensure that no user goes by unnoticed.
Another way to understand this is by looking back at Facebook’s project, Libra. The US government abruptly shut the project down, partially due to the uncertainty of a new, digital currency, but mainly due to their fear of losing their strong power grip.
With the largest part of crypto investors being US-based, we do hope that the country will eventually soften its stance against what seems to be like the best technological invention of the century.
If they don’t do so, and purposefully choose to ignore the topic at hand, they could soon be replaced as the world’s mightiest superpower, by other countries that saw the opportunity and took it at the right time.
The countries that are first in the race of crypto adoption will most likely be the ones that are undergoing economic growth. Smaller countries with a willingness to grow and accommodate new technologies. At this moment, all we can do is wait for the future to unfold.