Bitcoin Forum

Bitcoin is a decentralized currency that is currently worldwide due to its fantastic price spike. How not, 1 bitcoin today can buy anything equivalent to $63 thousand and this value has exceeded the price of 1 Kg of gold. But now I don't want to talk about the price, but something interesting is how the government respond to this phenomenon as an effort to modernize the digital financial system.

As far as I know, El Salvador was the first country to adopt bitcoin as a legal currency compared to dozens of other countries that first legalized bitcoin as an investment and trading asset. The main thing that crossed my mind is what exactly does the government expect from the legality of bitcoin as a legal currency?

A few things I want to know:

• Does the government want to get involved in this investment as an alternative to their desire to generate wealth for the individual or the country?
• Want to provide financial freedom for all its people?
• Want to improve people's living standard during the pandemic because of the difficulty of generating jobs?

I'm happy if you want to share your opinion with me here, but I want to remind you again that: don't be a spammer if your post doesn't want to be reported to a moderator.

Bump !!!

Do you really not want to share your opinion?

you bumped after 40minutes... take a breath.

governments dont want to invest.
they gave up on gold 50 years ago after all.. the only believe in their fiat and their bonds

what the government want is to have legal control of laws and regulations of its citizens use of an asset.

take alcohol. they want to control
who gets to consume it(age law)
who gets to brew it(health and safety law)
income, tax and revenue

governments want to be able to apply things like an excise tax on good
they want to ensure large brokers are doing things honest and not ripping people off
they want to be able to make laws to monitor large trades for AML and tax evasion

they cannot make laws as is until they ban the asset/good/service. to then be in control of then giving licence to permit/allow use under their policy

EG with gold. they dont want to invest in gold. but they want to control the land/water permits to ensure gold miners do not abuse the land and water(environmental safety). they regulate the large gold exchanges/smelters to ensure they get tax from them. and also they can spot any money laundering/tax evasion.

El Salvador is a country that does not have its own official currency and still relies on other countries' currencies such as the USD. Since bitcoin was legalized as a currency by the government of El Salvador, the country currently has two currencies, namely bitcoin and the US dollar. If you ask what the government expect from bitcoin which has been legalized as a currency then you will surely think that profit is the main goal. But I will assume that income or profit is not the first reason but more toward reducing dependence on the use of other countries' currencies.

I think this is an external goal of the government and the people involved because investment is the choice of every individual and the government may not be able to invest with people's money. The 3 question above will be answered once the government legalize bitcoin as a currency because investment, financial freedom and an increase in the standard of living are possible with bitcoin simply because they know what bitcoin is used for.

for el salvador, its simple. they do not want to be ruled by america when it comes to remittances and other currency matters.
after all america make the rules on the dollar not el salvador

with bitcoin el salvador does not "own" bitcoin. but elsalvador can finally set its own rules and regulations on remittance. without america's oversight

The united states is often described as a superpower in terms of military force and economic wealth. But what does this mean in practice? What is the backbone of america's economic strength?

Might it be fair to say innovations and inventions fostered by silicon valley and US big tech contribute heavily to american GDP, jobs, wealth and overall the USA being a superpower?

If the above is true. Could we theorize that nations can become more wealthy and elevate their status and standard of living by being early adopters of new innovations and technology. Similar to how the USA reaped benefits of silicon valley and its related tech industries?

What happens if people around the world are looking for the next big thing. The next google, apple, microsoft, facebook, twitter. And what happens if bitcoin and cryptocurrencies are the next big thing.

Could that help explain a motive behind el salvador looking to hop on the cryptocurrency bandwagon?

I think that the main reason why countries usually legalize Bitcoin not as a currency, but as an asset or something of this sort is taxes. Money isn't taxed. If you have income, it is taxed, and if your goods are subject to VAT, there's also this tax in the prices. But fiat itself is not subject to taxation, whereas assets can be (it depends on the country, I think). As for El Salvador, I think the main reason is to generate jobs and improve the economy of the country, but it's not merely pandemic-related. El Salvador has been struggling long before the pandemic, and they need something to boost their economy. And being less dependent of the USD (and, consequently, the USA) won't hurt.

In the case of El Salvador, I believe the government decided to opt for crypto as legal tender in other to rescue their dwindling economic situation by extention will also positively affect the citizens of that country because a healthy economy favours everyone,

If government from other countries decided to take same decision it may not be for the same reason, different countries with different issues (economic, political, religious or otherwise) in the developing countries for instance, such decisions will be mostly to enhance the financial status of the people which also include improving the standard of living, take axie infinity for example, although it is not a legal tender adopt by the government but it has been able to change the lives of people in the Philippines where this game is mostly popular, similarly same thing could apply when the government chose to do this having the people in mind,

Your points are some how related because everyone of them compliment the other, the sole aim of the government is to serve it's people,  providing an enabling environment for everyone, same goal will be achieved if they adopt crypto or introduces another technology.

The government will want to find all means to make kyc mandatory so they can be able to know people that are making use of centralized platofrms so they can be able to tax accurately.

No because the government do not want freedom, they want to track all what their citizens is doing. There is nothing the government are concerned more about than ways to make money from citizens. They do not care about us.

The governments will want to but they better prefer to do giveaway as in few countries. But those that invested in bitcoin have really make a lot of profit that can help.

more than 12.hours. many would contributed but we are warned by that highlighted line up there that we'll get reported if we couldn't contrulibute 😁

i dont think the government does want anything to do with BTC. they wanna destroy it and want people to only look at the fiat bills alone and not even want to improve your life. in fact if you become richer they want you to experience slow death by taking huge tax from you.

the government can't stop BTC. might as well enjoy its growth like what El salvador did.

I doubt the government is interested in generating wealth for the individual or the nation or even improving people's standard of living during the pandemic? All that matters to the government is to collect taxes and fill the treasury so that they can fill their pockets.
There are two possibilities for governments to accept bitcoin in my opinion:
The first possibility is in the case of a country that suffers from economic problems and its national currency is collapsed or does not have a national currency. Bitcoin is a very suitable option for these governments to evade the control of the US dollar and American laws that control these countries. This possibility applies to countries such as El Salvador and perhaps later Venezuela, Peru and others.
The second possibility: In the case of countries that have a strong economy, but were not able to control Bitcoin or even prevent people from using it, in this case, these governments can resort to accepting Bitcoin, setting regulatory laws and collecting taxes from people, because the lack of regulation of Bitcoin leads to the loss of all these taxes.

El Salvador's Bitcoin adoption is the product of Nayib Bukele, and my personal opinion is that he uses it as a populist tool. He wants his people to profit from the bull run and be greatful to him for introducing them to BTC.

Countries like Iran or Venezuela might eventually officially embrace Bitcoin because it's money that is not controlled by their enemy, the US. Other countries, especially the smaller ones, might try to become Bitcoin tax havens or hubs for crypto companies.

Huufff, looks like people ^[spammers] are really afraid to post their opinions beforehand because they don't want their posts to be reported to the moderators. Lol

You do know how effective the posts I highlight are in preventing spammers from sharing their opinions with us, right? Hopefully more OPs will be willing to remind them of every thread they make and let the spammers piss their own pants.

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Eliminating dependence on other currencies, taxes, controls, rule by rule and improving the community's economy, investment awareness, maximizing state revenues by providing business opportunities for mining and exchange and so on.

If the things above are the goal of a country that legalizes bitcoin as a legal currency then it looks like we can see many other countries will follow. But I doubt that bitcoin will function well as a legal currency for a country that has its own fiat. El Salvador has no currency and they have long adopted USD as a currency, so is bitcoin only suitable as a legal currency in countries that do not have their own currency?

I think those who mean well want something that is safe and have the backing of the law. Other reasons for legalization could be secondary.
A Just society that's governed by Just law will likely legalized it or probably remain neutral until the society is sure it's safe and worth legalizing

If this thread is about El Salvador then I have 4 answers that are currently circulating in the news online (https://www.beritasatu.com/ekonomi/827537/kenapa-el-salvador-pakai-bitcoin-apa-kabarnya-sekarang) regarding the purpose of legalizing bitcoin as a legal currency. Someone might be able to verify its correctness.

1. El Salvador does not have its own currency. For years they used dollars to transact every day.
2. As many as 70% of the population of El Salvador do not have a bank account where most of them work in the informal sector.
3. So far, El Salvador has depended on its country's economy on remittances of migrant workers, most of whom are in the United States
4. Desire for change to a more inclusive financial system.

So bitcoin is legal as a currency in El Salvador because the government wants to change the economy for the better considering that so far they have to issue a sizeable remittance every year. The large number of workers in the informal sector is a good reason why bitcoin can be their financial solution.

It's not about generating wealth for their citizen but it's about their main concern to their own government and how they can make use of bitcoin.

I don't think so. If they want to give financial freedom to its people, they'll choose a different thing. And having financial freedom shouldn't be reliable to the government's idea and policies. It comes from within of each individual.

Maybe, since it's about technology and upgrade the government like El Salvador wants their people to improve their way of living through cashless society.

The government of El Salvador has legalized bitcoin because they don't want to depend much on US dollar anymore in which they will always be in controlled with America. This time with bitcoin, they are free to do whatever they want to do with their own currency. And since EL Salvador aims for more development in their own country's economy in which inflation will not be an issue anymore, so bitcoin would be a perfect choice. And since bitcoin can be taxed, so it will certainly contribute to the welfare of the El Salvador citizens which is the first concern of its government.

The government runs an institutional system to control everything that can contribute to the progress of the country, the economic sector, abundant wealth and also the things they can control. While Bitcoin rejects the idea and prefers to give us freedom.

If the government wants the legality of Bitcoin, then it is very clear where the government wants to interfere in the things they should not approach.

Currently Hyperinflation is rampant in the world and Bitcoin can overcome it, but as a consequence no institution can interfere (only individuals and blockchain). Wouldn't that be tantamount to assuming the existence of a domestic government is no longer necessary in this case?

I think your every step is correct. Essentially, there is a reason why the government has not adopted bitcoin, and that reason is its lack of control.How can the government collect taxes if it cannot control its transactions?And we all know that the government collects taxes on every single penny of every transaction we make via fiat, bank, or bond, or whatever is legal in our country through the government.We know why gold, diamonds, and these types of things are highly recommended by the government as investment assets. This is because the government can control its market and generate tax from buyers and sellers both. So the basis of government is all about tax. They don't care about your financial freedom, but I think that is a risk factor for them. 

The additional thing here, people or government should not always think using Bitcoin is already your are investing of it, there are lot of uses for Bitcoin, as it first is a mode of payment, be your own bank, and financial freedom since no one can control your Bitcoin or Bitcoin itself.

For sure, there are still a lot of laws or some regulations that will come in the future regarding Bitcoin but again, they can't touch Bitcoin or control by them, that's how Bitcoin was built.

All governments certainly want the country and its citizens to be more advanced and can be reduced from poverty. Here Bitcoin as one thing that is already increasingly visible potential into the future because so far it has been able to cover the problem of poverty or lack of jobs. Because of its existence on the internet... of course this can be a new breakthrough as a new thing that can advance its citizens, which of course can help with economic problems, especially during the pandemic so far.
But not only in a pandemic situation, I think Bitcoin actually deserves to be maintained as a currency that should be legalized, well maybe because many things are still being considered regarding government regulations, the banking system, etc. Bitcoin seems still on the threshold of its recognition, which in fact the government definitely wants to take the positive side of Bitcoin's advantages.

as bitcoin develops later, of course the government will impose new regulations, although not with regard to bitcoin legalization, but increasingly transparent regulations will certainly be applied. because we know the main reason the government has not been able to legalize it is because of its uncontrollable nature. but at least we can still use it as a tool to make money

Actually, countries can be divided into two groups. One group of country contradict crypto and try to forbid everything connected with it such as China, another group that I consider to be more wise, don't shub advantages of crypto and try to involve in crypto market so as to take benefit as well such as US, Salvador.
I don't think that authorities really want to give freedom to all people as it is deadly for them to get a free person instead of obedient citizen.

Some small countries may indulge into investment or even mining like El-Salvador is planning. But I don't think any other country will commit their resources to such things. But don't be surprised if few other small countries start mining in future. Government movements are unpredictable so you never know what's coming.


Lol! Governments have millions of other ways to achieve the same! Since they have not explored those million ways,  I don't think they will let bitcoin do it. Rather if they allow bitcoin to help their people to achieve financial freedom, that will expose their own inefficiencies.

What I strongly believe that if a government legalizes bitcoin in their country, the main moto is revenue. Tax revenue from bitcoin users, tax revenue from exchanges etc. And the tax percentage will be much higher than their normal tax slabs. For example you can see Japanese crypto tax structure.

It will divide people if they don't properly make them understand on how this new system will work on their economy so before they execute their plan to accept bitcoin on their country and make it a legal currency they should study first its possible effect to the people or the merchant and also they should do it slowly until their citizens will figure out on how to use the new technology introduced to them by their government. For sure many will impose since its nature of people if they don't understand they give a bad impression on it so government should not rush things on adoption if they want to do it.

It mean that the government is obliged to socialize what bitcoin is, its advantage, how it works, how to use it, its disadvantage, its effect on macro and micro economics, etc. to the public before they legalize it as a legal currency? If that's what you mean then I have to agree with you and this is part of the pre-legalization preparation for something new for national use like legalizing bitcoin as the legal currency of a country. I think the government need a few years to carefully prepare everything before they leave it to parliament to decide.

Financial freedom is undoubtedly the reason for the government to legalize bitcoin as a legal currency, because the government has always wanted control over bitcoin and its users with rules like KYC & AML. This is their way of reducing dependence on other currencies and the legality of bitcoin would be easy to consider in a small country like El Salvador compared to developed countries.

No, governments have all the wealth they need, they can generate wealth themselves by increasing taxes on its citizens, or simply creating more currency out of thin air. They don't need any extra wealth as long as they have financial control over their citizens, so Bitcoin acts against their interest. El Salvador adopted Bitcoin because their economy wasn't doing well to begin with, so it's not as if they had much power to begin with.

US and China have large economies and have propped their own respective currencies up, on the other hand. Their idea of "generating" wealth involves increasing the money supply.

That will increase confidence in bitcoin in the eyes of the public, the state, the apparatus, as a whole in a country. Cryptocurrencies will also grow faster with the legality of the government. We all expected this to happen.

I would go with the first option you provided: which is a way for them to generate income for their country and the people.
As for the two other options, I am not so sure about those ones. Reasons why I am not so sure about them is because: talking about the second option which is about giving freedom to people, I don’t think the government would like to give people 100% freedom when it comes to finance, they would also like to be in control when it's something that has to do with money, take for example they would like to know where every transaction is going to and where it is coming from, information like that would be important to them.

Then talking about the last option which you said that they want to improve people’s standard of living, I don’t think that is really possible with Bitcoin and cryptocurrency in general: if the government wants to improve people's standard of living, then they will have to do that by providing jobs for the people and not through cryptocurrency.

For anyone to really gain anything from cryptocurrency they will have to invest money, and not everybody has the money to invest in cryptocurrency. That is just my opinion, I can’t really tell you what the government really wants from cryptocurrency when they legalize it, it is up to them, they all know their plans.

This is pretty much it.
Custodial wallets here in my country are quite strict when it comes to KYC especially when you are looking for a cash out from Bitcoin. They are sometimes doing video interview in cases of such large amount of money being cashed out of Bitcoin, since 1 whole coin pretty much makes one a millionaire in here.

Bitcoin is not issued, endorsed, or regulated by any central bank. Instead, it is created through a computer-generated process known as mining. In addition to being a cryptocurrency unrelated to any government, bitcoin is a peer-to-peer payment system since it does not exist in a physical form. As such, it offers a convenient way to conduct cross-border transactions with no exchange rate fees. If bitcoin will be legal to government it will increase it's confidence in the eyes of the public. Cryptocurrencies will also grow faster with the legality of the government and I know we all expect this to happen.

I don't think that at some point the government will completely replace the current financial system with crypto or bitcoin, even if it becomes a global wide accepted, because not only it will render their control impossible and because some people still don't want to use it, and El Salvador is a great example for that, as people thought that they will make bitcoin the main currency and lead to their local currency becoming useless but luckily they were smart about going with giving the freedom to the people to chose, and at the end of the day that is the purpose of using bitcoin and crypto, is to have freedom and control over when and how you wanna go about doing your transactions, and to me that is what all the government should get from the Salvador experience and that is what they should be looking for in illegalizing bitcoin.

But, it is expected bitcoin may help people to fight against inflation which is more important along with providing job. I am seeing many people who are suffering after retirement. I worked hard when they were able to, and we cannot expect everyone to be working till the age of 70 or 80 hence governments must work on providing people power to fight against inflation which is highly possible through adapting bitcoins legally.

This must be a concern for most government like they want their people not getting suffered by investing and losing by any means. I believe governments must have started studying bitcoin and then they will come to know about the true potential of bitcoin then they may not have problems to make bitcoin legal.

I'm answer what has happened in my country when bitcoin was discussed by the finance minister in my country. Volatile prices are not a criterion for a country's investment. they mostly want definite profits. and wallet security is also not 100% guaranteed not to be lost or stolen. fortunately, even though they are aware of this, there is no prohibition against citizen in my county from buying, storing and trading .

When the government sees the benefits of bitcoin, they see that they can make more money from buying and selling bitcoin like what regular people did in trading. The government can also use bitcoin as reserved for their funds besides using gold to protect the value of their money. But they need to know that the bitcoin price has volatility and could go anywhere.

The government gives financial freedoms to their people by using bitcoin because their people can use bitcoin to make money from buying and selling bitcoin. Besides that, if their people can have a new source of income in bitcoin or cryptocurrency, they can survive and generate more money in this pandemic and the future.

Maybe the government can get taxes from the bitcoin user because they can track the people's transaction from their bank and know how much money they could earned from bitcoin.

No need to legalize, the government can do anything with the state budget based on internal policies. And bitcoin is decentralized for anyone who wants to invest that there are actually no legal restrictions.

The government hates decentralization, legalizing bitcoin is just an attempt to make it a bit centralized. Just look at how Elsalvador created the Chivo (centralized) wallet (https://ffnews.com/thought-leader/el-salvador-bitcoin-and-chivo-a-commentary-on-financial-inclusion/).

You have to also look at the contradictory side, some people have had no luck dealing with crypto. After all, bitcoin was not created to change the standard of living. One has to find the ways, not the tools.

The government hopes of course the benefits for the country, as the government of El Salvador is currently doing they legalize bitcoin and make it as a legitimate transaction tool they are very hopeful that in the future they can get a big profit for the country in the future, and those who make investments of course individual profits can also be obtained if later the price of coins can reach the target that has been set, In this case the government of El Salvador must have made the best possible regulations so as not to harm his country.

Looks like I've heard enough of your opinion by now although it seems that some of you have the same opinion as other users. But no problem, I now have a bit more information about my question in the thread and thanks everyone for sharing your opinion with me even though I had to wait for the first poster more than 10 hours since this thread existed.  :D

And now, this thread is locked.