There have been regular meetings regarding cryptocurrencies between different nations and within the nation. It has been almost 13 years since cryptocurrencies entered the world’s financial system. However, even though the nations have not accepted bitcoin or any other crypto as a legal tender, there are several parts of the world where cryptocurrencies are taking massive influence on people. People may not get cryptocurrencies to legalise by the government, but still, they are using them for a lot of things. For example, you have bitcoins and want to purchase. Now, you may not want to purchase anything with bitcoin because the prices back to its more than anything else. If the same is the case of a few years back, you would have purchased anything with bitcoin very quickly.
Every day, things are changing. Earlier cryptocurrencies were only a medium of making transactions, but now things are different. Now, people look upon cryptocurrencies as a medium of making money. They invest in cryptocurrencies and use them for trading as well. The important matter of discussion today is why bitcoins cannot take the whole place of the Fiat money. There can be multiple reasons behind the same. Some people believe that cryptocurrencies are not functional as fiat currencies, and therefore You cannot accept them in the financial system of any country. However, different people have different beliefs. You need to understand the core of why the government is scared of using cryptocurrencies as a medium of transactions all over the nation.
Price change risk
When different cryptocurrencies like bitcoin were not fluctuating, people were unaware of these digital coins. It is all because of the fluctuations in the prices of bitcoins that it has become so popular nowadays. Well, in one place, the volatility in the prices of bitcoins have a lot of influence on people and the other hand, it is stopping the government from accepting it as a legal tender. It is something that is happening daily. The prices of bitcoins go higher and lower, and you do not know if bitcoin prices go as low as zero. Now, can a government take chances of keeping it in the legal transactions of the country? The answer is a no.
Business hours are crucial for something significant in your daily life. Therefore, when you accept bitcoin as a legal tender in the country, it becomes an essential part of your daily life, playing a crucial role. For example, suppose that the whole world’s market is closed at 1 AM. Now, you will be sleeping in your country, but the prices of cryptocurrencies like bitcoin will be fluctuating. Therefore, if you have bought bitcoin during the daytime and at night, the prices will go very low, you will not be able to handle the losses of ekrona digital currency safely .
The high liquidity associated with bitcoins can be an important reason for accepting the bitcoins as a legal tender and not accepting bitcoin as a legal tender. When something is very liquid, people can sell them within a couple of seconds, and the government will be left with nothing. So the government has to accept the legal tender back from the people with the prices will drop, and then, the prices of the particular cryptocurrency may stand at zero. It could be a situation of crisis for the whole nation.
The transactions of cryptocurrencies take place on the Internet only. It works through a Blockchain network, and therefore, it doesn’t exist in the real world. You need to understand that when something cannot exist physically, there could be a problem in the internet connection is down. For example, suppose government replaces fiat currencies buy bitcoins. In that case, they have to operate entirely on the Internet and in case of internet failure, you cannot use your money at all. It is a situation when the government has to take care of everything very well.
Risk of losing passwords
When you have a Fiat currency in your hands, you can keep it physically anywhere you want. However, cryptocurrencies do not enjoy any such privilege. They operate on the Internet, and if you lose the operational key to get access to them, you may not be able to get them back ever. Hence, losing passwords could be a severe problem for a cryptocurrency user.