Why Bitcoin Cannot Be Regulated (Why Bitcoin Is Unregulated)

Why Bitcoin cannot be regulated? Why is Bitcoin unregulated?

According to the Financial Times, Bitcoin was found to have “technical vulnerabilities” in November last year, and the US Treasury Department and the National Bankers Association claimed that it violated federal securities laws.

This means that cryptocurrency has lost its position as a new asset class, similar to stocks. However, if it continues to grow, the value of this new technology may increase by more than double.

However, although these issues have not been resolved and may even cause concerns among industry participants, should Bitcoin be regulated like gold?

In fact, governments seem to not care about Bitcoin’s legal status and have not considered any potential economic threats to protect investors from losses. Because Bitcoin is an emerging thing and as more and more people adopt this digital network and engage in transactions, it will become an important part of people’s daily lives. But currently, there is no specific regulation to govern or prohibit them, so legislation for this industry is still a topic that needs attention. Why cannot Bitcoin be regulated?

1) Bitcoin itself is an innovation, not a real commodity or service. It is a new and permissionless system created using blockchain technology, designed to provide programmable solutions for maximizing economic and social efficiency; 2) Due to Bitcoin’s highly decentralized nature (i.e., peer-to-peer payments), Bitcoin can be used for anything that can be determined; 3) Bitcoin’s underlying infrastructure is very complex and prone to attacks, which can disrupt the stability of the entire system.

However, if Bitcoin cannot reach such a scale and be able to handle all types of applications, effective rules must be established to ensure the smooth development of Bitcoin. The reason why Bitcoin is so controversial is that Bitcoin is not a currency in the true sense but belongs to a specific social organization rather than a completely independent entity, making it difficult for Bitcoin to continue. What is the technology behind Bitcoin?

First of all, Bitcoin is an algorithm consensus mechanism created by cryptographers. Bitcoin was initially born in January 2009 when Satoshi Nakamoto invented the first smart contract, known as the concept of “hash function.” Later, he introduced it into the field of computer science, realized a faster method of calculating proof of work, made it one of the unbreakable codes, and finally got confirmation from Satoshi Nakamoto and recognition from many people.

2)

In addition to open-source projects, Bitcoin also has many other use cases: cross-chain communication protocols, based on DAG data storage, including distributed ledger technology such as equity certificates, and privacy coins. The main purpose of Bitcoin is for identity management, such as transfer payments, and so on.

3) The legality of anonymous issuance of Bitcoin has always been a hot topic of discussion.

Why Bitcoin is unregulated

The US government has a very strict attitude towards regulating cryptocurrency because it does not allow the use of Bitcoin for payment. In late 2017 to 2018, market crashes to below $30,000 were believed to be related to regulation as central banks around the world took different actions to protect investors and ban trading of crypto assets. Since digital currencies have not been clearly defined as securities, they have been treated as an investment rather than a medium of exchange. However, until now, no clear way to regulate crypto assets has been found.