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Introduction

Democratic congressman Brad Sherman of the United States has presented legislation in the

United States Congress to prohibit the mining, sale, acquisition, and usage of bitcoin and

other cryptocurrencies within the country. According to Congressman Sherman, these digital

currencies pose a tremendous threat to the United States. The purpose of this essay is to

investigate and explain the origins of his concerns, as well as to assess their veracity.

Furthermore, given Bitcoin's popularity, it will assess whether such a bill would be successful

if passed. This talk will also cover the position of the US dollar in today's global marketplace,

as well as the measures made by the US government to retain its dominance.

The Concerns and The Legitimacy:

Several reasons contribute to Congressman Sherman's concerns about Bitcoin and other

cryptocurrencies. Because of its decentralized structure, cryptocurrency is becoming an

increasingly popular tool for organized crime groups to employ for money laundering and

corruption. Because of their pseudo-anonymous character, these digital currencies have the

potential to support illicit activities such as money laundering, tax evasion, and financing

illegal operations. Furthermore, the volatile nature of cryptocurrencies raises concerns about

their potential impact on the stability of financial markets and the broader economy; further

research in a Transparency International article discusses the relationship between bitcoin and

corruption and organized crime., the author S Elsayed (TI) summarises and points the

following

 “Cryptocurrency is not only restricted to cybercrime but is used for all types of

crimes that involve the transmission of monetary value. This includes money

laundering, financial sanctions evasion, and other corruption-related crimes such as

bribery and embezzlement.

 There are constraints associated with the use of cryptocurrencies in criminal

activities, such as the volatile value fluctuations, which contribute to the reluctance

of criminals to use cryptocurrencies for long-term investments.

 International development agencies can play a role in mitigating the criminal use

of cryptocurrencies. This includes coordinating the development and

implementation of regulatory and legislative frameworks, encouraging bilateral

and multilateral coordination to establish networks for experience sharing, and

supporting platforms for public-private collaboration.

 However, resources spent by donors to curb crypto-related corruption imply an

opportunity cost. Donors will need to determine whether the same resources would

be better spent on improving traditional law enforcement practices or other

development priorities.

 This is a pertinent consideration given that although the use of cryptocurrency in

criminal activities is increasing, cryptocurrency transactions related to criminal

activities represent only a limited share of the criminal economy compared to

cash.” (Hub, 2023)

While these concerns are valid to some extent, it is essential to note that Bitcoin and other

cryptocurrencies have also demonstrated the potential for positive disruption. They offer

benefits such as decentralization, financial inclusivity, and faster, more secure transactions.

However, regulatory and supervisory frameworks must be established to ensure

cryptocurrency use aligns with legal and ethical boundaries.

Different people and economists have different perspectives on Bitcoin. It works on a

blockchain system which is a very powerful technology it serves as a visible and dependable

public ledger that can be accessed by anyone but is controlled by a single user in blockchain

everyone works together to maintain a ledger and make changes according to specific rules,

this blockchain ledger for example prevent duplication of transactions and continuously

records all transaction enabling the existence of currency without reliance on a central bank

Bitcoin has no official government or central intermediary. “The “trust” is based on an open

system of cryptology. Numerous accountants known as “miners” look at the “open ledger” to

verify that the transaction is legitimate. The first one to verify the legitimacy of a transaction

collects a small fee after confirmation and agreement by a certain number of other miners. It

truly becomes a "circle of trust”(Is Bitcoin a Legitimate Currency and Should You Invest,

Trade, or Avoid? – Dave Landry on Trading, n.d.)

As genuine as any other unbacked "fiat" currency, such as the ones you carry about in your

pocket right now, is Bitcoin. As with all fiat currencies in the past, only time will tell if it

succeeds or fails. It is worth exactly what someone is willing to give you for it, nothing more

and nothing less, just like any other asset. When investing, use caution, and maybe don't

spend more than you would on a pointless hobby. The cryptos have shown to be excellent

trading instruments based on their present trending traits. They should be handled and traded

similarly to other asset classes. Since there have been a few horror stories reported thus far,

exercise caution as trades aren't governed. The foundation of Bitcoin is the blockchain. It will

transform a lot of industries. Here, we must be on the lookout for opportunities. The good

news is that the charts will set the standard for blockchain and cryptocurrency chances.
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The potential success of the Bill :

Determining the success of Congressman Sherman’s bill, such a bill won't be passed and if

passed it won't be successful as Bitcoin already has popularity and people also have an

awareness about how it works many of them think Brad Sherman is supporting big banks and

have no evidence on his claims on Bitcoin: Some of Congressman Sherman’s biggest donors

are big banks and mainstream financial institutions, the same interests threatened by the rise

of cryptocurrency (Polumbo, 2021).

Alternatively, one could conclude that he is banking on others' ignorance to sway voters, and

is fully aware that the nature of cryptocurrencies forbids it from being centrally controlled.

While it is feasible to make transactions more difficult by restricting on-ramps such as

exchanges that supply cash for crypto purchases, the flow of cryptocurrencies cannot be

stopped due to the decentralized nature of their networks. It would be nearly impossible to

prohibit cryptocurrency trading from one jurisdiction to another, particularly in the case of

nations seeking to avoid sanctions. This, as the senator so eloquently demonstrated, is what

distinguishes cryptocurrencies.

Interestingly, the Congressman intentionally ignored the fact that criminals far and away

prefer to use fiat cash, namely USD cash, as a medium of exchange, owing to its inherent

lack of transparency and traceability.

Moreover, the success of such a bill would require considerable international cooperation, as

cryptocurrencies transcend national boundaries. Collaborating with other countries in

implementing regulatory frameworks and enforcing compliance with legislation would be

necessary to curb illicit cryptocurrency activities effectively.

Impact On Bitcoin’s popularity:

The proposal of a law by a prominent US politician, such as Congressman Sherman, might

have both positive and bad consequences for Bitcoin's popularity. On the one hand, it may

raise public awareness and spark debate about the advantages and disadvantages of

cryptocurrency. This increased focus may entice more people to investigate cryptocurrencies,

hence increasing their adoption and appeal. Negative attitudes aired by influential persons, on

the other side, may cause worry and uncertainty among potential cryptocurrency users. If the

law gains traction, it may create an atmosphere of regulatory ambiguity that harms Bitcoin's

reputation and impedes its general acceptance. I believe now we all live in the 21 st century of

fact check and awareness where people won't follow or trust what people say but check and

verify the facts.

The chart below shows the world's money in perspective.

“Last year, Bitcoin became more stable than gold, and earlier this year, the price of a

Bitcoin surpassed that of an ounce of gold for the first time. Currently, all the bitcoin in the

world is worth $41 billion. If that amount is hard to grasp, just think of it as one Larry Page

– because $41 billion also happens to be the net worth of the guy who co-founded Google

with Sergey Brin. You'll find both fortunes at the right side, and the lower end, of this graph,

which gives you an idea of all the money in the world. You and I don't figure out it unless

you're Larry Page. Or Bill Gates. The richest man in the world is worth $86 billion, or the

net worth of Larry Page and Bitcoin combined – with enough change to buy the L.A.

Lakers, the Toronto Maple Leafs, the Chicago Cubs, and the Solomon Islands (not a sports
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team, but an entire country). Bitcoin is the Uber of cryptocurrencies: the biggest, worst, and

best-known, but not the only one. Add it up to Litecoin, Monero, and all the others, and

the total volume of virtual money floating around the internet, out of the reach of

governments and banks, is a whopping $100 billion. That is about as much as the current

GDP of Morocco – the 60th-largest economy in the world”. (All the World’s Money, n.d.)

Money, of course, is fiduciary, which means it only has as much value as the trust we place in

it. from the above graph and trends we can easily analyze the popularity and significance of

Bitcoin it is proving to be successful as a form of currency and we have to wait more years to

analyze whether it bets the failure rate of fiat money

US Dollars Position in Global Marketplace:

To completely comprehend the ramifications of the cryptocurrency, ban bill, it is critical to

evaluate the US Dollar's position in today's global marketplace. The US Dollar continues to

be the world's major reserve currency, supporting international trade and financial activities.

This topic has an enormous influence on the US government over the global economic

system. Efforts To maintain the dominance of the US Dollar, the US government can coexist

with the proliferation of cryptocurrencies. While disruptive, digital currencies have not yet

challenged the US Dollar's dominance. Instead, they have given an alternate mode of

exchange as well as a potential hedge against existing fiat currencies. As a result, the bill's

introduction could be interpreted as an attempt to protect the US Dollar's dominance by

minimizing potential rivals. As there are two sides to coins economists believe the power and

dominance of us dollars are declining and the bitcoin is increasing

Bitcoin vs. USD purchasing power. Source: Seth

“Specifically, the chart shows the Consumer Price Index (CPI) for all urban consumers in

terms of purchasing power of the consumer dollar in the US city average, which has been

declining since the 1960s, dropping from 300 to the current 33.2 points (88.93%).

On the other hand, the purchasing power of Bitcoin in the same context has shown as quickly

climbing, soaring from 33 in 2010 to the current 255 points, or a whopping 672.73% increase

over the observable period of only 13 years”. (Nicenko, 2023)

Current international tensions like Russia cutting their dependence on US dollars and China's

promotion of using the Yuan as an international medium suggest the weakening of US dollars

The changing geopolitical and economic scene of today poses challenges to the US dollar's

worldwide prominence. China has surpassed the United States as the world's largest trading

partner, and it is attempting to use its might to increase the RMB's position. Tight government

regulations and a lack of transparency are two characteristics that limit the RMB's potential as

an international currency. Financial sanctions, which restrict foreign access to the US

financial system, are another challenge to the USD's dominance. While these penalties may

be useful in terms of foreign policy, they may also damage the USD's global significance.

Since the 2008 global financial crisis, America's M2 money supply has expanded

dramatically, and much more so during the COVID-19 pandemic. Cash, bank deposits, and

liquid assets such as money market securities are all included in M2.

Inflation in the United States is likely to accelerate in the next years. The Federal Reserve

declared in August 2020 that it would convert to an inflation-averaging strategy. This

indicates that annual inflation can exceed 2% in a given year as long as the 2% target is met

over a longer period. Higher inflation can be beneficial in some ways. The US debt-to-GDP

ratio is already over 100%, and it is anticipated to reach 195% by 2050. With so much debt

being generated, continuous inflation can erode the real worth of these liabilities over time.

The trade-off, of course, is that the US currency will continue to fall. (Lu, 2021)

In these scenarios the value of bitcoin in coming years will increase as it serves the purpose

of money without a centralized system controlling it or fluctuating it, the value and

significance of bitcoin will improve and will serve as a medium of exchange in the future

market and its international wide popularity is increasing day by day I don think it will

Replace us dollars but chances are there to dominate us dollars

Conclusions :

Congressman Brad Sherman is concerned about the potential use of cryptocurrencies, notably

Bitcoin, in illicit activity, tax evasion, and the influence on the stability of the traditional

banking system. These are legitimate issues, and they must be addressed.

For numerous reasons, an outright ban on cryptocurrencies may not be the most effective

answer. To begin, it is critical to know that cryptocurrencies have a variety of possible

benefits. They can provide financial services to unbanked or underbanked communities, make

cross-border transactions faster and cheaper, and function as a hedge against traditional

financial instability.

To successfully govern cryptocurrencies in the United States, a comprehensive and

coordinated approach is required. This strategy should include not only domestic regulators

but also international collaboration. Cryptocurrencies work uniquely in a global digital space,

and coordinated efforts are necessary to prevent illicit activities effectively.

In conclusion, finding the appropriate balance is critical. Instead of an outright prohibition,

the US should focus on developing a regulatory framework that takes into account the risks

and benefits of cryptocurrencies. This approach provides financial stability while capitalizing

on the innovation and benefits of decentralized digital currencies, allowing the United States

to remain at the forefront of financial and technological innovations in a developing digital

age.

Is Bitcoin A Legitimate Currency And Should You Invest, Trade, Or Avoid? – Dave Landry on

Trading. (n.d.). https://www.davelandry.com/is-bitcoin-a-legitimate-currency-and-should-

you-invest-trade-or-avoid/

All the World’s Money. (n.d.). HowMuch. Retrieved October 20, 2023, from

https://howmuch.net/articles/worlds-money-in-perspective

Nicenko, A. (2023, April 5). Bitcoin’s purchasing power outpaces US dollar: Game-changer

in the financial world? Finbold. https://finbold.com/bitcoins-purchasing-power-outpaces-us-

dollar-game-changer-in-financial-world/

Lu, M. (2021, August 5). How Dominant is the U.S. Dollar? Advisor Channel.

https://advisor.visualcapitalist.com/how-dominant-is-the-us-dollar/