Bitcoin Forum

The use of cryptocurrency is has increase over the years as many people now see crypto as an alternative to the fiat. My question is if the government legalize cryptocurrencies are means of payment, what will be the implications on the global economy?

The global economy will leave the hands of the government to the hands of cryptocurrency market makers I think it's the reason the government won't legalize cryptocurrency. In addition the block chain technology will help many institutions like the health sectors keep record, they'll be more job opportunities available for the skilled. Many will get employed without degree. So except for the bullish and bearish state of cryptocurrency, the blockchain network if adopted by the world it'll boost the global economy.

https://www.pelicoin.com/blog/what-is-the-economic-impact-of-cryptocurrency

Only a few Governments may legalize crypto, like you saw the case with El Salvador. So many Government will not Legalize cryptocurrencies for obvious reasons. One of them is that they have no control over the cryptocurrencies like Bitcoin.

Maybe what we shall see in most counties are Central Bank Digital Currencies (CBDCs)

Do mean to say how will bitcoin impact global economy if it gets global adoption. If that be your question then it is pretty much simple there will be improved economy and decline in inflation rate because the government won't have access to prints more coins and since the coin in circulation is been regulated by consensus algorithm it means we will definitely have improved economy. But why this will never happen because the government will never allow you be your own bank.

I will be assuming that you are talking about legalization of bitcoin and other shitcoins in today's economic world.

Economy will become more globalized. It will be easier to perform cross-border transactions and trades. Which will create an influx of new investments. This could go either way,  but if such cross-border investments with cryptos are done in a controlled and regulated manner then it will be very positive.

On a domestic level, monetary policies will become redundant due to free flowing nature and volatility of cryptos. It will have a huge impact on everything. So it's not going to happen unless the state can at least control the supply of cryptos and have an influence over its price. These two conditions have to be met, before they even think about legalizing it.

A stable implementation of cryptocurrency will increase the participation. Which means more money to invest in new businesses, which means more jobs, which means more spending, which means booming economy  :)
This is an ideal case, i.e. the cryptos were integrated in a very controlled fashion into the system and citizens are smart enough to access its potential. Otherwise it will be a disaster.

I really doubt that all governments worldwide take the initiative to incorporate cryptocurrencies as a means of payment, even though it would be a fairly radical and significant change in the world economy, it would be difficult to see this reality... It is true that some countries in the world have opted for introduce Bitcon as a legitimate currency, but if we talk about globalization it will not end up happening, at least not for now. The user "logfiles" mentioned it before and I reaffirm the comment of

Since this is if several governments are beginning to use and consider CBDCs as a good strategy, if you do not know what a CBDC is, here is a link for you to read and know what I mean.

Link: https://acortar.link/cfe4pI

Deeply doubt that would happen
It's more than payment
and much bigger for mainstream adoption

The basic effect that will be very visible when the government legalizes cryptocurrency as any means of payment in the country is the lack of bank customers who save money in banks because they can already save some money in cryptocurrency in their respective wallets. So that the Bank can no longer play large amounts of money because it has experienced a shortage of deposits from the customer. Another thing that can happen is that it is difficult to develop the value of existing global currencies such as USD and also others when everyone is already using cryptocurrency for everything.

but the central government will not let cryptocurrencies rule everything. Currently, cryptocurrencies are subject to various regulations from each country's government and even impose income taxes on cryptocurrency users. so in real it will not happen completely, crypto is still under the shadow of the government and will not be able to escape. When cryptocurrencies dominate all sectors, they also cannot regulate the global economy, and the risks posed by cryptocurrencies will also be dangerous for those who do not understand and do not understand how to use cryptocurrencies.

Governments already have CBDC and they will be much more amenable to rejecting cryptocurrencies that are beyond their reach. Because governments don't want to take further risks when control is not with them. The government owns the banks and the position of the banks is not to like cryptocurrencies at all which always makes them lose the profits from the taxes created. The habit of escaping taxes to crypto is the only thing that has until now been the reason why CBDC was created.

To some extent the governments will try to limit the usage, fearing the control. Beyond certain point, only option is to regulate the usage. At such instance governments will find ways to regulate the usage and start making revenue out of the taxation. This is what happening with my country, now we're having the highest taxation of 30% on the profit.

Apart from this governments were also developing their own CBDC which is a digitized form of keeping track of every transaction of the common people. Through this privacy gets disturbed, but government find it good for administrative needs.

The only implications in the global economy is that countries are going to accept crypto as alternative to fiat. But I don't think that it will happen in the future, crypto will be a alternative for some countries but there will be against it, so the world is still divided.

And how many countries have fully supported it? or in the gray area, or totally banning it?

Yes, government will have their own CBDC to counter crypto. Digital fiat at the hands of every citizen but then again, they can be track by their government.

Due to the nature of cryptocurrency as being volatile, It’s very to get even a slightest approval for crypto to become a legal tender. Only few country do this and the most popular was El Salvador which didn’t go well because there people protest about there leader moves that result to huge loss of there countries funds. The government wouldn’t allow this to happened because this will change the global economy and will make fiat less use since people will choose the currency with limited supply over fiat that is probe to inflation.

Without adoption there won't be any effects on global economy. And legalization won't necessarily increase adoption significantly. Because crypto would still be volatile, have scalability problems, altcoins are full of bugs, and so on.

And you should never forget that crypto is just a form of money. Money alone can not create prosperity. It can't turn a broken economy into a booming one.

Legalizing crypto as payment are impossible since it need Bitcoin is successfully legalized in the entire countries, this will attract other countries plan to accept other coins. But sooner or later when one of coins they've accepted but become scam, anyone will realized only Bitcoin is a coin which never scam or manipulated.

I'd say it's high likely Bitcoin will be accepted in most of countries as a payment alternative in the future, but not with the other cryptos including Ethereum.

This is reason enough for the government not to legalize cryptocurrencies as it directly will affect them via reduce banking through their centralised channels. In the long run, It is possible that most governments may just pay a blind and deaf ears to the activities of cryptocurrency and not discourage its use but at the same time may not outrightly declare the legalization of cryptocurrency especially for the very developed countries.

governments will continue to measure their citizen labour force in fiat
with minimum wage laws, tax laws, court fines, bail and compensation laws measured in whatever currency a government prefers

where by crypto is treated the same as investments, shares and pension plans.

Even if a government legalizes cryptocurrency, they will not promote it. They will only focus on their own fiat. Also they will most probably create a separate tax class for cryptos and then impose heavy taxes on it. Overall, a government will never encourage its citizens to use an alternative currency over their own currency. Exceptions are there but that will remain as an exception only.

So with such things and no government backing, bitcoin will never be able to become a favorite payment method. To be honest, bitcoin is a bad payment method. Better alternatives are available. So it will stay as a trader's asset or investment largely.

Each country has its own government and you need to proceed from this. If the government of one country legalizes bitcoin, it will have no effect. But there are also details here: we are talking about small and weak countries, like El Salvador, changes in which have no effect on the rest of the world. The picture is completely different if bitcoin is legalized in an influential country like the United States and China. The consequences will be colossal. The catch is that strong countries are very reluctant to move in the direction of bitcoin adoption, in contrast to, for example, El Salvador, which took such a step not from the best life.

I do not think that they are trying to limit usage by getting high taxes, they just like getting taxes and that's it. What we should realize is that corruption happens in ALL governments, some people think it is only their own nation but it is in EVERY government, some do it big, some do it small but they all do it. That means taxes are very important. Because, the more taxes are paid, the more they could get rich while still managing to keep some sort of infrastructure of the nation as well.

So, if there is 10 billion paid and 2 billion pocketed while 8 billion is used for the nation, if you do 12 billion then you get 10 billion all spent, and 2 billion still pocketed. That's why crypto is probably loved by many nations.

Crypto is an addition to fiat not an alternative. For being an alternative, majority of merchants would have to start accepting it, that stage is far from our reach at present. Since you are in this forum with bitcoin-users it might seem that crypto is popular, but come to the reality, in most countries you will rarely come across a bitcoin user in the day to day life.

Governments have not legalized crypto in many countries yet, so it is hard to predict - but considering the model on which bitcoin is created, it will be for the good, inflation should reduce and corruption/bribes should also stop.

I don't see it. For something like that to work, crypto would have to be completely regulated. No anonymous addresses and anonymous sending. The world's biggest countries don't want to take their chances and gamble with something they can't completely control. Making Bitcoin legal tender would affect the position and strength of their national fiat currencies.

And Bitcoin wouldn't even be able to sustain such an enormous influx of new users. Imagine what that would do to transaction fees when millions of new users start using it. Instead of 5-10k of unconfirmed transactions, which is a high number by itself, we could be looking at millions instead. And then that situation would have the opposite effect on people. Why would I want to use Bitcoin to make my purchase if I have to pay at least $30 in fees if I don't want to have my transaction stuck in the mempool for days?

It will depend on how the regulations are going to be made by authorities. The impact can be a more decentralized global economy, in case governments respect the individuals, or the impact can be a more centralized global economy similar to the currently one, if regulators decide to go through the bureaucratic and oppressive route.
The implications will continue being a mistery for us until they happen for real. All we can do is to speculate and to hope the best is going to be done from the average adopter or citizen's point of view.

This is true and I agree with you. Using the government of my country as an example, their reason for not legalizing cryptocurrency has always been our local fiat currency this is because they believe that citizens will abandon the use of the fiat if Bitcoin is accepted as a means of payments in my country. Moreover, if they should legalize cryptocurrency, people who make use of it will be overtaxed just as you said and no doubt citizens will be forced to continue using their Local fiat currency since they won't encounter much tax on the use of it for payment of goods and services.

I was just thinking about how to compose an essay with money and government as the major talking points when this topic caught my attention. 'Keeping them poor, keeps them controlled'; is a paradigm to express how most governments work. If this is no longer available, then they find ways to get back the control.
Since cryptocurrency has brought light as an alternative to fiat, which is easily regulated by central banks and government policies, the poor have an opportunity for better living via yields from crypto investment. Imagine legalizing it around the world, governments fear their systems might crumble, hence one of the reasons I believe they want to impose tax and regulate the free use of crypto currency for transactions.

You said it yourself that crypto was seen as an alternative to the fiat currency. Technically, it was created as a compliment to fiat not to dethrone or make fiat obsolete because crypto bridged the gap in border to border transactions.
Therefore, there won't be any form implications on the global economy. It's just the government hate the citizen having liberation and I'm sure if Bitcoin is centralized it will be already legalized globally as we speak.

There isn't a global authority that cracks down on crypto usage, and most countries today with large economies already allow crypto as a means of payment. Bitcoin is already a portion of the global economy, albeit not very large compared with other assets.


CBDC's aren't in mainstream usage right now, they're not a factor that's contributable to a country's economy that I've seen, and they're certainly not a player in the global economy.

The global economy is much more  intricate than just the minetary side of it, and even with that, crypto will only be one of the options, not the only option. So the impact on economy in general won't be much. In time it could make some things shift around, but givernment acceptance dosen't equate to usage by people, and that's what moves the needle the most.

Firstly, Governments will not legalise the use of cryptos fully. Though in many countries cryptocurrencies are legal to use, there are limitations like taxes.
One or two countries adopting cryptos will not impact the world’s economy much.

Government acceptance might improve the usage of the crypto but this happening in the right place and right time is having low probability. Using crypto currency will not make every person rich so this should be kept out the picture, only difference is the easy use and decentralisation.

If more companies push governments then it will become a possibility but this will happen gradually not rapidly. With the continuous negative outlook of certain groups towards crypto the path is difficult but possible to overcome.