Will the government kill bitcoins?

The Internet is full of talk and questions about cryptocurrency – yes, again – after the recent price of bitcoin broke $ 60,000 coin. The serious question on many lips and screens is whether the federal government will allow this rival of the US dollar to continue to operate, or will it regulate it more strictly – or even ban it.

Opinions on Bitcoin and cryptocurrencies are generally very different. Elon Musk -the richest man in the world- is cautiously optimistic. At the recent Code Conference on declared the cryptocurrency is already too widespread for governments to destroy.

He may be right. But it is not sensible to underestimate the destructive power of institutions whose power is at stake. If the government wants to shut down the crypt market, it can have the resources. Regulators like to select winners and losers.

The space companies SpaceX and Tesla are an example of this. SpaceX has faced impending bankruptcy and Goldman Sachs and other top lenders he refused provide the company affected by the explosion loan. However, NASA partner with SpaceX, alleviating money problems.

Tesla faced bankruptcy in 2008 and the Obama administration rushed to his rescue. The price of electric vehicles has exceeded their market value, so did the government offered tax breaks to offset the difference. Even now that the company is being re-evaluated $ 1 trillion, created by the Biden administration lucrative subsidies as part of the current infrastructure package, which will continue to fund Musk’s overcrowded piggy bank.

These two examples highlight how the government has the power to support companies, people and ideas that it likes. On the contrary, it can to destroy you don’t. Bitcoin competes with the basic function of government; this puts him on dangerous ground.

Governments may come after cryptocurrencies, and some have already arrived – China has already taken action against digital coins. Last month, that prohibited its citizens from holding, trading or mining coins, which causes the whole market crash. At present, the US does not seem to be doing the same. However, it sent out some disturbing signals that current and potential bitcoin owners should keep in mind.

Earlier this year, the FBI revealed that it had recovered $ 2 million in bitcoin value from the hackers responsible for breaking the Colonial Pipeline. Most thought this was not possible for technical reasons, but the Justice Department report on the incident made it clear that “there is no place outside the FBI’s reach.”

Finance Minister Janet Yellen now has it come out as a cryptoskeptic. The Security and Stock Exchange Commission is considering increasing regulation on digital currencies. Some Washington officials even he was hovering the possibility of creating a so-called “Fedcoin” – the government’s own cryptocurrency.

It is not clear whether the government will enter the crypt market or not; it is clear that Musk is short-sighted when he says he can’t suppress the bitcoin error if he ever decides to. He can support it as easily as his business has done, or crush it as his competitors may have done.

This does not mean that cryptocurrency is not a good short-term or long-term investment option. Every investment comes with risks, and when it comes to bitcoins, possible federal intervention is one of those risks – even if the richest man in the world is unaware of the severity of that risk.