Crypto has come a long way from where it started. A couple of decades ago, not many people knew what bitcoin or crypto is, let alone sit hours monitoring its chart to know when to buy bitcoin or any other crypto. Today, cryptocurrency is a big deal; it is such a big deal that it has become a matter of national security. It is so serious that crypto has been banned in some countries. As of the time of writing this article, only a handful of countries mine crypto: the US, Iran, Canada, Germany, and Kazakhstan, to mention a few. If you wonder why it is a matter of national security to mine or buy bitcoin, you are in the right place. Read on to learn more.
Not taxable
One of the main reasons crypto is becoming a threat to national security is because it is not taxable. Unlike fiat currency, crypto is not considered a legal tender in many countries, hence not subjected to tax. However, people can buy bitcoin, for example, and use it to carry out various transactions such as buying appliances and paying certain bills. In other words, people can buy and sell without paying tax when they use crypto. When people don’t pay taxes, it costs the government millions, if not billions, in tax revenue. And if not for anything, these tax funds could have been used to improve the country’s security.
Not regulated
When investors buy bitcoin, it can be a national threat because there is no particular body regulating it. While centralized cryptocurrencies are not much of a threat in this aspect, decentralized cryptocurrencies are the primary threat. With decentralized crypto, the government has little to no control over its operation. Moreover, the government having no regulatory power over the operation of decentralized crypto can have adverse effects on investors. Because the government does not regulate the crypto ecosystem, the ecosystem is not safe and can close down without any sanction. So, investors investing in crypto take a big risk, and they know this. Also, because there is no centralized body regulating a decentralized crypto ecosystem, there are lots of scammers using it to defraud and steal people’s funds.
High energy consumption
Cryptocurrencies are also becoming a concern on the national level because of how much energy it takes to mine them. Mining bitcoin, for example, consumes an average of about 91 terawatt-hours. And with the growing popularity of cryptocurrency, more and more people are becoming more interested in mining bitcoin because of the high demand to buy bitcoin. The electricity used to mine bitcoin could have been used for other valuable things to improve a nation’s economy. And at the end of the day, the government will have to spend more trying to provide more electricity. Because of the amount of electricity mining crypto consumes, the government in some countries is trying to regulate giving electricity to crypto miners. By doing so, the governments can utilize the available electricity efficiently.
Pushes funds internationally
Another primary concern that makes mining or buying bitcoin a matter of national security is because it makes it easy for people to send funds internationally. With crypto, anyone can send money internationally whenever they want. But because the government has little to no control over how crypto is being spent, they cannot do anything about it even when it hurts them. Moreover, the more a country’s resources are spent internationally, the higher the likelihood of a recession. And if a recession occurs, it will affect the government’s ability to properly secure the nation and provide basic needs for its citizens.
Investors invest abroad
Also, many investors buy bitcoin because they want to invest abroad. When investors invest abroad rather than locally, it slows down a nation’s economic growth. By investing abroad, the investor is sponsoring the growth of another economy, providing jobs for its citizens, among other advantages. This development could have been in the investor’s country. But because it is easy to buy bitcoin or other cryptos, many investors look for the most fertile country and invest in it. Even though an investor’s country of origin isn’t as fruitful as other countries, when investors invest in several sectors of the economy, it helps the economy grow and become as fertile as the other economy they have their eyes on. And since the government does not control how crypto is being used, it cannot regulate how investors invest their money.
