The pros and cons of cryptocurrencies issued by governments

The cryptocurrencies are here to stay. It is important to know its function, application, advantages and disadvantages, particularly in the case of those that have been issued and supported by governments around the world.

Entrepreneurs, merchants, academics and ordinary citizens have access to electronic currencies, so information about the positive aspects and those that are not so is invaluable.

Know the advantages

Among the advantages or benefits of digital currency is its legality, as they have a regulatory framework that establishes the value as well as the rules of purchase, sale, exchange and related activities.

On the other hand, a cryptocurrency backed by a government offers citizens confidence and security, which can boost investment and trade in this asset. In addition, the dependence on traditional financial and banking systems decreases, as people opt for transactions in bitcoin, ethereum, dash or other authorized cryptocurrency in their territory, to avoid intermediaries, commissions, thanks to blockchain technology and electronic wallets.

Attention with the disadvantages

But as there is the other side of the coin, it is necessary to mention some disadvantages in the issuance and commercial use of electronic currencies. In the case of those issued by governments, their intrinsic privacy and anonymity may be lost due to the authorities’ tendency to compulsively track data such as customer identity, type and amount of transaction, negotiation currency, among others.

To this aspect is added the creation of excessive regulations that could hinder the dynamics of the crypto ecosystem, converting it into a kind of extension of the traditional financial system.

To make matters worse, the decentralized nature of cryptocurrencies could disappear in the case of those issued by governments, which become subordinated to a central entity that controls all aspects related to the asset and limiting its evolution.

M.Pino

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