4/13/2022 - Technology and Innovation

Bitcoins and Cryptos: A system that was born unregulated

By gustavo neffa

Bitcoins and Cryptos: A system that was born unregulated

Bitcoin was born as a P2P exchange (Peer-to-Peer), or among users, i.e. without intermediaries. It is the first decentralized digital currency in the world and many others have followed the path, even improving it. Cryptos can be sent and received over the Internet. They are coins, such as the euro or the dollar, and aim at the exchange of goods and services, which has been nervous in recent years to the regulators, who are in charge of the finances of a country, but with the particularity that have no direct interference in a strictly P2P transaction.

So far, financial intermediaries such as banks, credit cards or PayPal, among others, have been essential, especially when dealing and transferring money. Your role is to make sure we're who we are. But all this is changing: blockchain transforms the value internet (which includes titles, certifications, records) and passes to digital and decentralized format, without needing intermediaries. It is based on self-confidence and its logic is that if everyone has or operates with the same information, then this information is reliable.

The fact that it is global and decentralized in thousands of us from a network where you can write without having a central node that organizes them, makes technology a community, a system-style ecosystem Apple or Google with multiple interwoven applications. All disruptive ecosystems on which users base their preferences and solve their problems.

Users want governments not included because they are not part of this game, which was born so that there are no intermediaries and make the transactions faster and cheaper. A technology that allows the transfer of digital data with a very complex coding, but in a completely safe way.

It is a new system that is changing the way to understand business, economy and society, something that regulators do not like because they feel they lose power and control over individuals, the economy and money, because they are direct competition of “traditional” money.

Through bitcoin, agreements and transactions can be made securely without revealing confidential information between the two parties and without the need for intermediaries: the perfect world, but all a temptation to black money that is greatly fought by regulators, who force banks and exchanges to be solidarity and responsible for investments.

Therefore, the world has advanced a lot in regulation: the exchanges in which account openings are held have to now identify its users as if it were a traditional investment account, connecting it to a bank account if you want the user. In addition, many formal mining companies are required to pay taxes.

There are over 100 countries that are developing regulated cryptocurrencies (such as China, still in the test phase) or that will do so in the near future. The same central banks do not want to stay behind and predict to launch their “CBDC” (Central Bank Digital Coins), i.e. their own cryptocurrencies. Other countries have directly announced the legalization and adoption of bitcoin as an official currency, as is the pioneering case of El Salvador.

In Argentina, inflation and constant weight weakness accelerate the use of cryptocurrencies, a rapid adoption that draws the attention of our regulators and government and control entities, wanting to incorporate new legal and tax frameworks. The cracks are voracious by nature and the intention is to increase taxes instead of lowering expenses (no matter when they read it), treating here also to take advantage through taxes to cryptocurrencies.

In summary, regulators look at this technology closely wanting to embrace this new paradigm and/or destroy it because it is direct competition depending on the case.

They can put a strain on their growth, invent new taxes to collect and have under control the miners and companies that are exchanges or provide wallet services, or virtual wallets where to host the cryptomendas.

But, although they can close the siege, what you can never do is prevent a transaction between two users among themselves through the new technologies, which is the highest percentage today.

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gustavo neffa

gustavo neffa

I'm Gustavo Neffa. Director of Economics and Finance at FinGurú. Partner and director of Research for Traders, leading a team of market analysts. I spent the last 24 years in the financial sector in both domestic and foreign entities, having occupied the post of Senior Research Analyst in Macrosecurities of the Banco Macro and the BBVA Banco Francés, as well as economic analysts with the economist in chief of the BBVA Banco Francés. I am also a professor in Corporate Finance, Investment Portfolio Management, Financial Asset Valuation, Valuation of International Investment and Finance Projects in various MBAs and postgraduate courses in Buenos Aires and in the interior of the country and professor of the MBA of the UNLP and the UNNE of Financial Asset Assessment and the postgraduate degree in the UBA Capital Market in agreement with ByMA. Co-director of the UNLP Advanced Finance Programme.

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