Is bitcoin a legit threat to fiat currencies?


Bitcoin came into this world in 2008 as a white paper. Since its arrival, bitcoin has been part of different controversies. Bitcoin lovers claim it is the perfect currency with the potential to evolve all systems. On the other hand, haters claim that it will threaten the sovereignty of the fiat currency. Haters also feel that bitcoins don’t have backing from the government, and it can lead to a role in different illegal and criminal activities. But, the real point lies somewhere in between both these claims. If you want to know about the history of bitcoin, you can check platforms to know how bitcoin will help the dollar poor 

Governments all over the globe have different approaches toward bitcoin. While countries like China have banned it altogether, nations like EL Salvador have adopted it with open arms. However, more significant nations like the USA and India are still unsure of using bitcoin as a legal tender. Here we will find out whether bitcoin can be a possible threat to fiat currency. Before you know about both sides of the story, you should know that the coming of bitcoin as a currency can undermine the government’s authority. With bitcoin’s arrival, the government has no control over the matter. If not taken care of, it can also lead to different criminal activities in the finance domain. 

Can bitcoin dismantle the system?

Bitcoin works on a decentralized system. Thus, there is a possibility that it will dismantle the traditional system of how fiat currencies work. The network of intermediaries and the element of the government system will be removed after the coming of the bitcoin system. We won’t require a central government when using bitcoin. Anyone can easily use the process of bitcoin mining and can run the node. Peer-to-peer transfer can also be possible between two parties. The current financial infrastructure has all these problems, and bitcoin will help eliminate all these issues. 

Why do governments around the world hate bitcoin?

Whether the government around the world will accept bitcoin as a payment method is still a question. Many governments are asking their citizens to stay away from bitcoin. But, some countries like Ecuador accept bitcoin as a payment system. The countries that are not accepting bitcoin opine that they are worried about the following problems presented by bitcoin:

Bitcoin may circumvent capital control.

The government has its capital control measures. They do so to reduce the outflow of currency. The main reason is that export can debase the value of their currency. For others, there are other forms of control that they have to use to function as per their monetary and fiscal policies. In these cases, the state-less bitcoin can be used for the wrong purposes, and the government may not have any control over it. The case has already happened in China, where Bitcoin was used. Looking at the situation, the government in China came up with a limitation on foreign currency purchases by using bitcoin. 

No regulation

Another major reason governments are wary of crypto is the absence of regulation. The existence of bitcoin has been more than a decade. To date, there is no pathway for bitcoin regulation. There were multiple issues in the past because of the lack of regulations. Governments cannot understand whether they should use it for a utility or as a store of value. There are no rules or regulations surrounding bitcoin. Government agencies often fear that bitcoin will become a safe asset in turmoil. These are some questions that have no answer from bitcoin makers or investors investing in the currency. Looking at these scenarios, it does not seem that bitcoin will become a threat to fiat currency. 


Bitcoin has been part of controversy ever since the day it was launched. Undoubtedly, the government is still worried about the usage and rules regarding bitcoin. But, the truth is that citizens are using and accepting bitcoin with open arms, which can be a major threat to traditional currencies.