Can government regulations have major impacts on bitcoin?

can-government-regulations-have-major-impacts-on-bitcoin

The Bitcoin market has booked at an unprecedented rate ever since it was introduced to the world over a decade ago. Indeed, its decentralization nature has ensured that it is completely out of the control of any Centralized authority, including the government and the Central Bank. Instead, it shares its power among its active users.

As Bitcoin keeps attracting so many interests across the globe, the governments of several nations fear that it could spiral out of control and render their Fiat currencies useless in the long run. This led them to establish certain legislations to restrict its usage. Indeed, sometimes one of the first things you would hear in the morning is news about Bitcoin legislation and this further reflects how insecure the governments are even though those insecurities are unfounded.

However, despite how tighter and stricter these regulations get, Bitcoin tends to benefit from it since its market value keeps increasing rapidly. Its fluctuation is highly unstable and this can either be beneficial or scary for its traders. An expert in crypto trading will find its high volatility and rapid price increase very great in making massive profits.

Can these regulations influence the price of Bitcoin?

This is an important question that many potential investors ask themselves. Some fear that the involvement of the government might be harmful to Bitcoin. However, there are some ways in which government intervention might affect Bitcoin price.

In some cases, the government might decide to regulate other asset prices, including their Fiat currencies. This will be done by selling and purchasing actions in the international market. Another way they can do this is to strategically reduce the level of enthusiasm that an asset class commands by imposing on it many regulations that ensure that the cost of doing business is very high.

To illustrate this further, when the regulation of Bitcoin in some countries is considered, most states would need a surety bond or an equivalent sum of fiat currency to allow Bitcoin exchanges within their territory. Now, the government can decide to ensure that the asset becomes scarce by saddling it with regulations. So, for UK traders, looking to get the right British trade platform, they must understand the legislation of crypto trading in their location.

All these actions are capable of crashing the value of Bitcoin because Bitcoin is an extra-national currency and its decentralized ledger spreads over different countries all over the world. The regulations must be a well-coordinated – and is oftentimes, very difficult – effort among many economies. However, these regulations do not seem to have so much impact on Bitcoin price given the absurd increase in its price within a decade of its inception.

What investors should have in mind before investing in Bitcoin

Trading Bitcoin might be very sexy and it gives a sense of nostalgia of the old early days of the internet when everyone kept dumping in their funds without having a real idea of what they are involving themselves in. It is important to understand the risks involved in it due to the volatile nature of Bitcoin.

As legislations against Bitcoin keep increasing, you must also understand the present legislations – if there are any – that are imposed on Bitcoin by the government of your country. You must also be able to understand the basics of Bitcoin trading so that you can enjoy the benefits that are associated with the network. You should also understand its potential to attract people with fraudulent agendas. As a result, you must ensure the security of your Bitcoin wallet.

Bottom Line

Bitcoin has established itself as the largest cryptocurrency worldwide. Because of this, its market value keeps rising out of control. This feeds the insecurity of the government and they have made significant attempts to impede the growth of Bitcoin through their legislation. Yet, this digital currency keeps expanding.

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