Bitcoin and other currencies why most governments hate it?

Can anyone make digital currencies? I do not know. What is the mechanism of its circulation? And who is the guarantor of it? I don’t know.

So says a pedestrian on a Cairo street, echoing questions that may come to the minds of many. But what if governments are making these currencies? The verse may be reversed.

In general, most countries in the world are hostile to popular digital currencies, such as Bitcoin and Ethereum.

El Salvador is the only country that recognizes bitcoin as an official currency, and the United States and Canada consider these currencies legal, while the rest of the countries either impose restrictions on their purchase and sale, such as Vietnam and Georgia, or work on laws to control them, such as Britain and the European Union, or prevent dealing with those currencies decisively such as China and Bangladesh.

Most of the Arab countries belong to this last classification, and among these countries are Iraq, Qatar, Oman, Morocco, Algeria and Tunisia. As for Egypt, it was not satisfied with banning digital currencies, but the Al-Azhar Mosque issued a fatwa banning them.

Why all this ban?
Cryptocurrencies are a volatile asset, their prices fluctuate rapidly and are affected by many external factors, which makes investing in them risky. There are those who made profits that are many times more than what they bought with, and there are those who lost everything they invested. But this volatility also occurs when investing in the shares of some companies listed on international and local stock exchanges, without being officially prohibited or criminalized.
Some of them may find it difficult to compare companies’ shares with encrypted digital currencies, as there is a clear use and an agreed value for those shares. The cryptocurrency investor argues that the same can be said for cryptocurrencies.

Ethereum, for example, has provided a solution to the problem of whether or not the original digital art questionnaire is using the NFT technology. Others argue that digital currencies keep them away from the risk of traditional money losing its value as a result of inflation.

Perhaps the main reason for this ban is that these cryptocurrencies belong to a decentralized system, which is outside the control of governments, central banks, and big money companies.

This system is called the decentralized economy or Defi. It is a system enhanced with hundreds of digital banking applications, thousands of digital currencies, interest rates and lending.

Colin Stone, an economic researcher, says in his interview with BBC Arabic, that it makes sense for countries to fight digital currencies, “Central banks and the official economy are the ones who control supply and demand, price and interest rates. Then digital currencies come to show that a system like this can be established. without a controller. But can there be an integrated financial system without a control mechanism?

What do blockchains, mining, and NFTs mean?
While traditional money depends on a cover of gold kept in central banks, so that each banknote expresses a percentage of this gold. The value of decentralized digital currencies is their cryptography, which is based on a technology called “Blockchain”.

Blockchain is a network of computers connected to the same cash register in real time. This record is replenished with arithmetic transactions of digital money, who bought, who sold, and what the current price is based on supply and demand, and this account is also replenished with new coins.

The process of manufacturing digital currencies is known as mining, which is a complex encryption process that requires powerful specialized computers, and consumes a lot of electricity, and it takes “miners” long periods to make a single, original currency that is difficult to hack or imitate.

And if a hacker succeeds in imitating a currency, or hacking a computer to steal digital currencies, the rest of the devices connected to the Blockchain discover this penetration and show the source of these currencies or their original owner, if any, and correct the record. This is the principle on which NFTs depend, now there can be an original digital entity, which cannot be copied and pasted.

Government race
This is how Stone explains the trend of different governments towards official digital currencies. Since the purchase and exchange of crypto-digital currencies is done through many digital exchange applications, it is not possible to fully implement the prohibition of countries for these transactions. Which is something that the anti-government governments may have realized. A new trend has emerged in countries adopting a centralized, official digital currency system, and this does not mean merely relying on credit cards and electronic accounts in exchange for paper and coins. Rather, it means a radical change in the monetary system in general.

According to the Atlantic Development Council’s Official Crypto Tracker Project, 68 countries around the world are developing their own central cryptocurrencies, including the European Union, Britain, Russia, and the United States. While 23 countries have already introduced their digital currency, such as China, Sweden, Singapore and Malaysia.

As for the Arab countries, Saudi Arabia and the UAE are in the stage of experimenting with digital government currencies, while Bahrain is still developing its digital currency system. Tunisia and Morocco also started the research phase. As for Egypt, its project was disrupted, after the results of the research on converting to digital currencies came to the conclusion that more than 80 percent of citizens do not deal with banks.

However, will these attempts to establish an official digital economy succeed in controlling the digital economy and competing with global digital currencies such as Bitcoin and Ethereum?

money fate
Colin Stone predicts that these cryptocurrencies will succeed “where people trust the official money and know it well, they trust the stability of its price to a certain degree, and they trust the institutions that manage it, we are talking about currencies like the dollar, sterling, the euro.”

But he believes that the choice of decentralized digital currencies remains a refuge for those who want to invest or keep their money outside the control of the government.

But what about Arab digital currencies? In a BBC interview with the organization “Zevay” for the Arab digital economy, Khalil Hammoud, a researcher with the organization, says that the matter may be more complicated in Arab countries. Digital, but in countries where citizens don’t trust their governments, people will turn to Devi. Devi gives people this outlet away from the power of governments.”

Ahmed Sass, a researcher at the organization, raises a question regarding user privacy in countries that suppress personal freedoms. He says, “What if all your transactions are registered with the government?” He pointed out that the official digital currencies are inevitably coming.

“The main goal of the organization was to provide Arabic content about the digital economy,” said Karam Al-Hamad, founder of “Zevay”. Then the project developed to transform Zivay into an Arab digital academy because of their belief that “the digital economy is the future.”

Some may see cryptocurrencies as the future, while others see a central monetary system indispensable, but there is no doubt that money as we know it may be just a stage in the development of the economy.