Why do we need regulations?
Check Lyuben Todev’s article.
Originally shared by Lyuben Todev
Is Global Regulation The Solution To Modern Day Legal Problems?
Sometimes it is easy to ignore legal problems – because they seem something far away, irrelevant to everyday life. Analogies can be drawn with the question how many angels can dance on a needlepoint.
This view though ignores the fact that law is the instrument that ensures your work is repaid. Law is the instrument that defines what is yours and how you can stand up to anyone ignoring the term “property”. So law can be considered something akin to mortar in a building – you are not sure is it there and how much it works until an earthquake strikes.
But on the other hand law acts slowly – it changes with speed of ages, because normally a problem has to turn into an avalanche, a pandemia, before legislation adapts. And maybe we have reached this threshold when it comes to cryptocurrency.
BitCoin in particular, along with a number of other cryptocurrencies have become a majer segment for capital markets, with on-going debate how the matter should be approached by national regulators. But solutions with national effect are doomed to fail – because most transactions are international. To introduce order in a transcontinental distributed peer network (that is to say that the ledgers holding BitCoin transaction information are held on every computer in the network) you would either need total control of the internet access within a territory, or a global approach. Such a global approach would have to back up national decisions regarding cryptocurrency and guarantee fair-play. Given the profits from BitCoin it would seem that fair-play is the last thing the system needs – but without it there is nothing to stop someone from expropriating a BitCoin wallet (or, more mundanely, just steel the digging rigs).
Here someone might argue that the peer distributed network has a sort of mind of its own – the ledgers are everywhere, so cheating in one would not be sufficient to do anything. This migh be true, but several considerations should be taken into account – the ledger distrbution cannot save you from stealing your wallet. And, as Ethereum showed, there are different opinions on cases, where cryptocurrency changes hands through fraud or extortion.
And these are only part of the arguments that concern normal cryptocurrency users. But for states cryptocurrency poses additional risks – avoiding taxation, funding illicit acitivities, etc. So, the more we use cryptocurrencies, the more risk they pose for the functioning of everything around us.
Global regulation seems like the right way to go – because, besides everything else, it will provide stability. Because it would mean that there shall be principles that shall apply to cryptocurrency transactions all over the world. This in turn would reduce the problems with different countries banning or limiting the use of cryptocurrencies.