On a strictly theoretical level, if adopted throughout the world, blockchain technology can potentially eliminate the need of centralized governments, and their influence in the worldwide economy. But how exactly would a blockchain-led economy work? Would it be feasible? Would governments cease to play any role? Well, the answer is rather complicated.
Satoshi Nakamoto once said that Bitcoin can be a very attractive tool to those with a libertarian viewpoint. This makes perfect sense! After all, if people cease to use fiat and other centralized currencies, a government cannot exercise any control over monetary policies, interest rates and even tax its population unless by forceful coercion.
However, as we are not yet living in a utopic situation, the transition likely won’t be too smooth. If those times DO come, chances are that the world’s countries will be divided into crypto-friendly and anti-crypto governments.
The role of crypto-friendly governments
So far, several countries have showcased their support for the blockchain-led economy. This support came in the form of a more lenient legislative framework, alongside state-sponsored incentives for crypto-related start-ups. For instance, Estonia and Singapore are focusing on a blockchain-based e-government strategy, whereas cities like Zug, Dubai and even the Philippines are attempting to create crypto-economic zones to encourage innovation as well as job creation.
The possibilities and application of blockchain are endless, and governments around the world can choose to benefit or shun it. However, it would be akin to those naysayers who said the Internet was a fad. Those people are never heard of ever again. Today, the world’s richest people are internet entrepreneurs – Jeff Bezos, Jack Ma, Pony Ma and many more, made their money through the internet, and in the process made traditional players such as tech giant, IBM and retail giant, Sears obsolete.
Governments of countries that favour the blockchain-led economy can adopt a strategy that entails:
- Using blockchain technology for administrative purposes, thus creating an e-government platform where citizens can easily interact with the state, hence reducing bureaucracy and enabling blockchain-based asset and identity registries, tax reporting, access to government data, certifications, licenses and more.
- Enacting crypto-friendly regulations that encourages the use of the technology, in the form of customer protection as well as granting legal value to smart contracts, and other blockchain-based legal agreements.
- Creating a tax reform targeted towards the blockchain-led economy, where favourable tax rates are imposed for crypto-based revenue, transactions and purchases, which will allow companies in the space to hire more, innovate and reinvest further to grow the economy.
- Adopting crypto-based payment infrastructure, since the state is usually the country’s largest employer, creating a fine example for other businesses to follow.
At Coinsauce, we have no doubt that the future will be bright for governments who play a positive role in encouraging developments in the blockchain space.
The countries who take a hard-line stance against blockchain and cryptocurrencies will likely to capitulate sooner or later. No country can live in isolation, and innovation will have to take place sooner or later. Even the banks and financial institutions have joined the movement, despite initially reluctant and dismissive. As money is still the life and blood of global trade, and trade feeds the world – a global standard for a blockchain-based economy will soon have to be created.
Cover photo by: Adam Gering