Why do Government Need Bitcoin?

[Rustam Meraj]

The government of the country does not like Bitcoin at the beginning, and the people of his country who like Bitcoin hate the reason for their choice. But later when the popularity of Bitcoin increases in his country and the demand of the people and Bitcoin is widespread, the government of the country respects Bitcoin. And later they start liking this Bitcoin and to protect the inflation of the country, they accept this Bitcoin as a holding.
Because Bitcoin is a digital currency, due to its wide demand in the current world, they are ready to grasp this Bitcoin more and they give the most importance to this Bitcoin as a holding to get the financial independence of the country in the future. Because Bitcoin plays the best role in eliminating the economic shortage of the country and in eliminating the economic shortage of the individuals who hold Bitcoin.

Your point regarding way governments will change their idea of Bitcoin is right, as they will first dislike it due to its danger to their power over money, but will finally have to respect it as more individuals use it. Later, government begins to like Bitcoin and uses it as planned resource, viewing it as gold to protect nation against inflation when money loses its value since its limited amount does not allow it to lose value like regular money. This final change is because of need to reach financial freedom in future both to nation and its people because government knows that Bitcoin is important, globally wanted digital currency that can fix economic issues.

[ruykeri]

We have seen that  almost all developed countries in the world also middle-income countries have shown a very positive attitude towards Bitcoin. There may be various reasons behind this. However, many countries in the world use the dollar as a reserve. But it also has a risk that sometimes the valuation may decrease due to political reasons and inflation, so they may decide to hold Bitcoin as a diversification. Some countries may really want their people to be economically ahead and keep pace with the future world, so they may hold Bitcoin or give the right idea about Bitcoin to their people. Another thing is that for the last 15 years, various negative things have been spreading about Bitcoin from many places, but even after that, Bitcoin has not died, Bitcoin has survived, that is why the government is trying to keep pace with Bitcoin.

[HustleZ]

Snip

You're right that there's something deep here, i think the confusion comes from conflating "cannot ignore" with "needs". These are not the same thing.

Governments doesnt need Bitcoin in a sense that they rely on it for legitimacy, revenue or monetary function. States existed Bitcoin and Can continue issuing fiat, enforcing taxes, and exercising power without adopting or endorsing it. In that narrow sense, the answer "No, Governments dont need Bitcoin" is correct.

Where i agree with you that governments also can't pretend Bitcoin Doesnt exist. Once a technology enables Censorship-resistant value transfer at scale, it Becomes aomething governments Must respond to, whether that response is regulation, taxation, suppression, accomodation, or strategic ambiguity. But being forced to respond is not same as needing it.

Bitcoin Creates a Constraint, not a Dependency

What makes Bitcoin unique is that it removes certain policy options from governments rather than offering new tools. Governments Can:

• regulate on-ramps and off-ramps
• pressure custodians, miners, developers and infrastructure
• criminalise certain users
• or attempt to co-opt narratives and legal categories,

But they cannot fully control the protocol or reinvent it. That's a loss of Monopoly power, not a new requirement.

So I don't think people who say "no" necessarily misunderstand Bitcoin. They may simply be answering a different question: "is Bitcoin necessary for governments to function?" The answer to That is No.

A better framing might be: Bitcoin Forces governments to adapt, But it does not make them dependent .

Some Governments will decide engagement is in their interest while other will decide repression is; many will speak out of boh sides of their mouths. That inconsistency isn't unique to Bitcoin it's how states behave when faced with technologies that undermine control ( the Internet, printing press, encryption)

Bitcoin doesnt need Government nor does the Governments need Bitcoin But they Can't ignore each other anymore.

[gunhell16]

Someone said something on Altcointalk and it got me thinking why do government need Bitcoin?
Yes I'm genuinely curious. I'm not talking about generic answers like making a strategic reserve or the likes
Something that would make them neglect the fact that Bitcoin is decentralized and doesn't need a Central Authority.

Why is that? From my point of view, I think other countries are already seeing Bitcoin as becoming almost the same as gold—something that isn’t affected even when there’s a global crisis. In fact, it seems like it has performed even better compared to gold, although both are good to use as reserve assets for countries, as they represent physical and digital gold assets.

Isn’t this exactly what the country of Bhutan is doing? Even though it’s a small nation, it’s making an effort to accumulate Bitcoin for the future, just in case the country faces problems.
El Salvador is doing the same thing as well.

[Rabata]

Fiat is losing trust from its people. Even the USD is not guaranteed to be always in power. Neither will the next fiat to dominate. No currency will always be on top but bitcoin exists outside of this whole fiasco which makes it more reliable for countries. Knowing that they will be fine as long as they have bitcoin no matter what happens with fiat.

The government does not need to make any decisions based on fiat currency because they themselves control fiat currency. The main point here is that the government wants to control and dominate everything. If in the future the price of Bitcoin increases a lot and it becomes acceptable to all kinds of people. Then if the government does not have Bitcoin, then they will suffer. The crypto-based assets will be reduced. Most of the control will be in the hands of the common people. No government wants to let this happen.

[purple_sparkles]

Fiat is losing trust from its people. Even the USD is not guaranteed to be always in power. Neither will the next fiat to dominate. No currency will always be on top but bitcoin exists outside of this whole fiasco which makes it more reliable for countries. Knowing that they will be fine as long as they have bitcoin no matter what happens with fiat.

The government does not need to make any decisions based on fiat currency because they themselves control fiat currency. The main point here is that the government wants to control and dominate everything. If in the future the price of Bitcoin increases a lot and it becomes acceptable to all kinds of people. Then if the government does not have Bitcoin, then they will suffer. The crypto-based assets will be reduced. Most of the control will be in the hands of the common people. No government wants to let this happen.

In my opinion, governments around the world are currently focused on total control. I also notice a strategy aimed at keeping the population not too wealthy, preferably below the average level, and not very well educated, because such people are easier to control and manipulate. Various methods are being developed to track all financial transactions, along with laws designed to limit ordinary citizens’ ability to use cryptocurrency. This kind of pressure can provoke resistance. I don’t know how far it might go, but it’s quite possible that at some point everything could simply explode under the pressure, like an abscess bursting.

[JayJuanGee]

[edited out]

Some Governments will decide engagement is in their interest while other will decide repression is; many will speak out of boh sides of their mouths. That inconsistency isn't unique to Bitcoin it's how states behave when faced with technologies that undermine control ( the Internet, printing press, encryption)

So many times governments speak out of both sides of their mouth.. and frequently it can be difficult to know their motivations, even though many times people will likely attribute various biases and/or misinformation from money interests that are pushing certain agendas - yet there surely tend to be control issues too.. which is perhaps part of the various battles in regards to information and/or the internet, which might incentivize alternative ways to communicate, and surely a certain satisfaction seems to come from diverting and contributing to infighting on  various social topics and frequently many of the BIGGER economic decisions are made behind the scenes while the infighting might serve to distract. 

Even well informed folks can get confused by these matters, including that science is frequently presented in ways to push a certain agenda even though there can be a variety of dissenting views that should not have to take a back seat.  Of course the control of money can create a lot of battles in which it is not going to be clear in terms of the motives being disclosed or the justifications for the policy outcomes are not made with out skewing and/or railroading certain facts and/or the hiding of policies and/or procedures in government attempts to remain legitimate.

[Finestream]

We should not forget that the government is the people, and there can be no any government if there are no people. So if these people are slowly into bitcoin because they have seen the potentials in it to change their economic situation, to hedge against inflation, and to turn one's country into profitable and productive, thus there's no reason that the government do not want bitcoin, do not need bitcoin to create big difference in the long run.

[Hypnosis00]

For now, I think the more appropriate question is, Why does the government hates bitcoin?

I have been reading different testimonies online about bitcoin how it has made wonders on their lives, but at the same time I've also seen some attacks for bitcoin claiming that its a big scam because all their hard-earned money were totally gone out because of bitcoin scammers. Maybe the government has supported this claim more, rather than seeing the legitimacy and real potentials that bitcoin will offer to the citizens.

[Churchillvv]

We should not forget that the government is the people, and there can be no any government if there are no people. So if these people are slowly into bitcoin because they have seen the potentials in it to change their economic situation, to hedge against inflation, and to turn one's country into profitable and productive, thus there's no reason that the government do not want bitcoin, do not need bitcoin to create big difference in the long run.

You sound to vague, there is no definite point in all of the statements, government basically need bitcoin to maintain the force or control system they have on people (the masses), bitcoin is really one of the paradigm that has shifted the love for fiat to itself that is, most people are beginning to realize how much they have been under a system that is controlled by the few and now probably want too much freedom which bitcoin offers but however, if the government are still involved in the running of bitcoin or has the monopoly of force to influence the things that happens around bitcoin then they still have the sole power and control over the people that is the pure intention of any government venturing into bitcoin.

[MarjorieZimmermanGinger]

Inflation and a country's economic development depend on many factors, such as monetary policy, foreign policy, and political stability...Bitcoin can't be of much help in this case. El Salvador is a clear example showing that Bitcoin cannot impact or improve a country's economy.

Bitcoin is known as an effective hedge against inflation because it has a unique rate and is able to withstand inflationary pressures in the long term. I think this is quite helpful because Bitcoin's presence provides a basis for people to escape from inflationary pressures. We're not talking about short-term inflation, because all problems arise at that point, but rather how hedging can affect the economy, despite the many factors that influence inflation. El Salvador also experienced some economic progress after adopting Bitcoin, despite facing pressure from the IMF for certain reasons. I believe this change is evident in El Salvador itself, because with strong faith in Bitcoin, they were able to achieve financial stability.

[Marvell1]

Why is that? From my point of view, I think other countries are already seeing Bitcoin as becoming almost the same as gold—something that isn’t affected even when there’s a global crisis. In fact, it seems like it has performed even better compared to gold, although both are good to use as reserve assets for countries, as they represent physical and digital gold assets.

In theory, bitcoin is the asset with the most similarities to gold and is very suitable to be a safe haven. However, given what is happening, it is clear that Bitcoin is not yet a safe haven. It is vulnerable to global crises and is frequently dumped whenever the economy is unstable.

The reality is that it remains a speculative asset, and only performs well in stable economies and over the long term, it doesn't perform well in volatile economic conditions.

Isn’t this exactly what the country of Bhutan is doing? Even though it’s a small nation, it’s making an effort to accumulate Bitcoin for the future, just in case the country faces problems.
El Salvador is doing the same thing as well.

Yes, Bhutan is accumulating bitcoin, but they're not buying it. Instead, they're leveraging their abundant hydroelectric resources to mine bitcoin. Without cheap electricity, do you think they would invest in bitcoin?

El Salvador is currently the only country investing in bitcoin using government funds, but unfortunately, its economy is facing significant challenges.

[Oshio-man]

I know some people will not have time to find the meaning of government before responding to this question op asked, a government is a group of people that holds authority to create and enforce rules, provide public services, with this definition of government show that government are human beings that wish her citizens well by looking for way to earn huge amounts of income to improve their development in the country, government invest in bitcoin to be the ones to control the bitcoin in their reserve because they believe your keys is your bitcoin which they can have access to their bitcoin anytime or any day without third party involve.

[As-Soon-As]

The government likes to be in control of the country's economy the most, because this money helps the government to gain power. But in the beginning, the government does not like Bitcoin because Bitcoin cannot be controlled by the government. When Bitcoin spreads its influence among the people of its country and Bitcoin transactions are widespread and create additional pressure on the economy and increase inflation, the government of the country gradually starts liking Bitcoin.
In this, the government of the country gradually accepts this Bitcoin as the main tool to eliminate the economic shortage of the country by converting Bitcoin into holdings. In this way, Bitcoin is spreading its influence among the governments of different countries.

[Fiasem20]

The same reason why you need bitcoin could still be the same to as the government.You don’t need a generic answer to the reason why they need bitcoin but the simple truth is that most governments wouldn’t be concerned if bitcoin isn’t a hedge against inflation,but since it’s a hedge against inflation most weaker economy needs it the most to build a stronger economy by adding it to their strategic reserves.The reason why you need bitcoin is to build a decent profit on the long run right?so likewise the government needs to build a decent profit on the long run.Anyways,most governments aren’t concerned about the strategic reserve bitcoin would offer on the long run but they’re concerned about the taxes they benefit from centralized exchanges.

[fuguebtc]

Inflation and a country's economic development depend on many factors, such as monetary policy, foreign policy, and political stability...Bitcoin can't be of much help in this case. El Salvador is a clear example showing that Bitcoin cannot impact or improve a country's economy.

Bitcoin is known as an effective hedge against inflation because it has a unique rate and is able to withstand inflationary pressures in the long term. I think this is quite helpful because Bitcoin's presence provides a basis for people to escape from inflationary pressures. We're not talking about short-term inflation, because all problems arise at that point, but rather how hedging can affect the economy, despite the many factors that influence inflation. El Salvador also experienced some economic progress after adopting Bitcoin, despite facing pressure from the IMF for certain reasons. I believe this change is evident in El Salvador itself, because with strong faith in Bitcoin, they were able to achieve financial stability.

I neither deny nor do I say that bitcoin is not an inflation hedge. But the problem is that national inflation is completely different from individual inflation, and requires different solutions. Bitcoin is a great hedging tool for individuals and organizations, but it's not very effective at the national economic level. That's why I said you're only evaluating bitcoin from a personal perspective, not a government perspective.

Regarding El Salvador, you are completely wrong. They have achieved no improvement since adopting bitcoin, and their economy is on the verge of default. They had to appeal to the IMF and were willing to abolish regulations on Bitcoin's legal tender in order to receive support from the IMF.

[Agbe]

El Salvador and individuals that have been investing in bitcoin, made good profit from it and other governments have seen it so they would like to partake on it. And another thing again, government has a lot of unspent funds so they can dump it there as their National Reserve and the it matured enough in the All Time High of years to co.e, they can use to pay internal or external debts. Investing in bitcoin will help them in many ways.

[HyperCodexV]

Someone said something on Altcointalk and it got me thinking why do government need Bitcoin?
Yes I'm genuinely curious. I'm not talking about generic answers like making a strategic reserve or the likes
Something that would make them neglect the fact that Bitcoin is decentralized and doesn't need a Central Authority.

It's mostly based off profit incentives. It's gonna save the country a bigger amount of stress if they have an asset they are sure to a decent extent is going to continue to appreciate overtime. Basically every country wants to be at the top of the chain when it comes to economic stability and volumes.

Aside from that most coins the government claim to hold are seized assets and sometimes they do it to partially prove adoption if the country accepts bitcoin.

Ordinarily i don't think government actually need BTC for the same purpose as normal individual, it is just that they can't ignore it for any reason because btc is just globally accepted money that no single country or institution can control even if they try, so i think base on such positive trait, digitally inclined governments might see it as a way to protect their country's monetary resources against inflations and if you look at the way things are unfolding globally lately, many countries are trying to run far away from that over dependent on US dollar for their international transactions. One other thing is that it is not all about making profits alone, if very smart governments decide to buy btc as part of their assets then it clearly shows that they are open to adopt new technology and in turn it can attract investors and also make their country's economy grow faster and stronger.

[Wind_FURY]

Someone said something on Altcointalk and it got me thinking why do government need Bitcoin?
Yes I'm genuinely curious. I'm not talking about generic answers like making a strategic reserve or the likes
Something that would make them neglect the fact that Bitcoin is decentralized and doesn't need a Central Authority.

I believe not all countries/nation-states/governments need Bitcoin, BUT if your government is under an "anti-imperialist" regime, then it would PROBABLY need Bitcoin.

Why?

-> Censorship-Resistance. It will probably need an alternative financial system as a back-up/fall-back in case their banks get censored from SWIFT.

[henry_of_skalitz]

Someone said something on Altcointalk and it got me thinking why do government need Bitcoin?
Yes I'm genuinely curious. I'm not talking about generic answers like making a strategic reserve or the likes
Something that would make them neglect the fact that Bitcoin is decentralized and doesn't need a Central Authority.

I believe not all countries/nation-states/governments need Bitcoin, BUT if your government is under an "anti-imperialist" regime, then it would PROBABLY need Bitcoin.

Why?

-> Censorship-Resistance. It will probably need an alternative financial system as a back-up/fall-back in case their banks get censored from SWIFT.

Or if you are too imperialist, it would work out too