You probably know how central banks work. Surely you also know what central banks want to do with cryptocurrencies. Yes, we are talking about regulations.
Let’s take a look at why we should not listen to central banks.
Central Banks and regulations
Christine Lagarde, head of the European Central Bank, called the development of Bitcoin “funny” and called for its global regulation. The reason is simple, banks see Bitcoin and cryptocurrencies as a threat to their soverginity in issuing money and they want to regulate them.
First regulation attempts failed
Cryptocurrencies as a whole have surpassed the market cap of trillions of dollars, which is more than Google’s market cap, for example. However, central banks have already missed their chance, they did not start with their regulation attempts until 2013, when the price of Bitcoin grew above $ 1,000.
Not harm but not help either
When regulatory efforts failed, central banks began to take the position that they would not “harm” cryptocurrencies, but would not help as well. Which is somewhat reasonable, but it can also mean many other things for business. For example, a bank will not allow you to open an account because you are a cryptocurrency trader. This can harm some people because they are not doing anything illegal, but the banks will reject them.
After that central banks came with another idea. They will develop their own digital currencies, called CBDCs (Central Bank Digital Currency) and thus they will be able to compete with cryptocurrencies by stating that while cryptocurrencies are dangerous and unregulated, CBDCs can do the same, but are safe and regulated.
Cryptocurrencies vs CBDCs
CBDCs will be like bank accounts. There will be the possibility to freeze the account upon a decision of a central authority. Cryptocurrencies give you the opportunity to own your money, but if you make a mistake, you can also lose everything. So you need to study and be careful about what you decide to invest in and whom you will trust. That is why you need to read everything carefully. It is your own money, but also your own responsibility.
If you are not willing to risk so much on your own, you can try our digital wallet, which is insured by up to EUR 500 000. And if you are not sure where to start, Platon Finance has prepared a study program that will guide you through the world of cryptocurrencies, whether you are a complete novice or you want to broaden your horizons.