Government ran a monopoly as far as the printed currency is concerned. Till the time of inception for cryptourrency, their were no real threat to it. But as time evolves and there have been changes and the government might face a real threat due to the growth of cryptocurrency.
As of now, China, South Korea and a few other western countries are developing the growth of cryptocurrency. It is still taking baby steps in a lot of country. In India, while the usage of cryptocurrency has been barred as an alternative for currency it has been said that it can be used as a commodity product.
However, the discussion to use the cryptocurrency in India as a commodity, is at the initial stage as most number of population are not aware with cryptocurrency. Let us understand it better.
What is cryptocurrency and how does it works?
It is a digital currency which runs on decentralized technology and operates on public ledger called the blockchain. All the transactions are been recorded on the blockchain. It also allows traders to save their money digitally.
How does cryptocurrency impose threat on government monopoly?
The normal printed currency which is long in use has been under the control of the government. The value has been decided by the government too and it can alter production of coins or notes according to its need. Like Indian government, during demonetization, banned the Rs.500 note and brought the Rs.2000 note to the fore.
However, government has no rights on cryptocurrency, except legalising its use. The cryptocurrency can be made by anyone through the process of mining and it is easy to use.
Where does cryptocurrency derives it value from?
The value of cryptocurrency is derived from exchanges. It can also be used to launder money and cryptocurrency, on the whole, can easily be used by criminal groups as it is accessible to everyone.