Of the many revolutionary aspects of Bitcoin and other blockchain-based cryptocurrencies, one of the most significant is the financial freedom from government control that they provide. Because of this freedom, widespread adoption of Bitcoin and other altcoins will entail a whole slew of positive implications for citizens.
Bitcoins and altcoins, for example, are not dependent on central banks for their value. This is innate to the platform; Janet Yellen and the Federal Reserve have no say over a cryptocurrency’s supply. Because cryptocurrencies are independent from central banks, Governments, like those in Venezuela and Zimbabwe, cannot simply debase the value of a cryptocurrency whenever it suits their interests, rendering millions of people instantly poorer. By separating the currency from the government, citizens are protected from holding the bill for poor policy decisions, as was the case in Greece recently. This is one of the real radical implications of cryptocurrencies – that governments do not have any direct control over the value of a currency. Sovereignty is irrelevant in the blockchain universe.
It is true that directly handling the ledger is not the only viable way for governments to wrest control of a currency. A government could follow the electricity to arrest cryptocurrency miners. It could identify and detain core developers. It could even pass regulations to outlaw Bitcoin transactions in local businesses. The backbone of the network, however, will remain, and there are other applications, even non-financial applications for these newly emerging networks.
Undoubtedly, the repercussions of a currency out of a government’s grasp are welcome by many people who have faced real loss due to centralized, corrupt systems of governance. However, there is also a dangerous downside to many of these same revolution aspects of cryptocurrencies. For one, an anonymous currency is incredibly difficult to collect taxes on. While avoiding taxes may mean extra income for individuals or families, this is huge blow to one of the things that keeps a society functioning. Though governments can be corrupt and wasteful, taxes fund essential things for all citizens, such as roads, welfare, public safety and defense. While having inefficient governments fulfill these functions may not be optimal, there are not really any other sufficient structures in place currently to perform these vital community tasks. Some would say that these would be better off privatized, but that may even create more problems.
While many crypto-anarchists proudly celebrate the weakening of government control over the individual, they forget that it also weakens government’s control over important societal actors, namely powerful multinational corporations. Much like everyday citizens, corporations will face that same liberation from governments, as well. Arguably, they have even more to gain than individuals since they possess much greater wealth and face greater amounts of regulation by the government. However, individuals stand to lose tremendously because of this, as governments are often the only real check on powerful corporations.
The first emancipation that comes to mind for corporations in a crypto-economy is taxes and financial oversight. It is no secret, particularly in light of leaks such as The Panama Papers and the recent Paradise Papers, that corporations will endlessly hunt to pay the least amount of taxes as possible, even when that means entering dubious legal gray areas. Multinational companies notoriously use complex legal means, such as useless subsidiaries, shell companies, and offshore accounts to conceal profits from governments. Apple has just been sued recently for $15 billion by the European Union for not paying taxes to Ireland. Countless other big firms, from Amazon to McDonalds, have been caught sued doing similar things, as well.
Cryptocurrencies then offer corporations an obvious solution this problem. It is easy to imagine a corporation utilizing a form of cryptocurrency to skirt billions of dollars in tax bills. What’s better than a tax haven – a crypto haven. Instead of a company having to locate assets in obscure Caribbean islands to hide money, companies might only have to create obscure wallets to accomplish the same objective.
Additionally, it will become much more difficult for agencies like the SEC and other watchdogs to prevent fraud and other financial activities that ultimately harm consumers. Without some sort of oversight, a situation similar to the 2008 financial crisis could easily repeat. Investments in hard-to-trace cryptocurrencies would add a lot of risk to a global financial system that already teeters on the edge of another potential crisis. A crypto Wall Street may end up being a lot more dangerous to have than a regular Wall Street.
That being said, other aspects of blockchain technology do have the potential to hold corporations more accountable as well. Because blockchains offer a public ledger which is incorruptible, transactions and other recordable events can recorded for anyone to verify. For instance, Walmart is trying to implement blockchain to track its food products down the supply chain. The goal would be that when buying a banana, for example, the customer could easily where it came from and know exactly how it was handled from farm to shelf. Initiatives like this would help to keep activities of companies open and transparent, which would be a huge step forward in terms of consumer protection and corporate accountability.
In the end, it will all rely on implementation. It will depend on the approach governments take with regard to cryptocurrencies and blockchain technology in general. It will depend on if corporations will use blockchain to solely widen profit margins or if they implement systems that make transparency and accountability priorities. Overall, while the benefits of crypto adoption to the average citizens are extremely promising, we should be weary of the other side effects it may bring. Though individuals are set to reclaim independence and financial control for themselves, they may also be losing some of that power in the process as corporations grow even more independent.
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