The inventor of Bitcoin, Satoshi Nakamoto, said he came up with the idea because the financial crisis of 2008 made him want to invent an alternative to government money. The idea is strange to most people. They aren’t used to thinking of money as something separate from an issuing government. But when gold and silver were considered money, people often exchanged gold and silver coins based simply on the weight of the precious metal in the coin, not on whose king had a picture on the coin. But because physical currency is now mostly paper, it is not intrinsically valuable. It’s used as a medium of exchange because the government says everybody must accept it as money. It’s valuable by government fiat, so it’s often called fiat money. It’s not backed up by anything except the power of the government.
Of course, Bitcoin and other cryptocurrencies are not backed up by anything intrinsically valuable either, except the demand for them. In a recent blog post, Wall Street insider Paul Mampilly looks at how governments are cracking down on or manage cryptocurrencies even though Nakamoto’s original intention was to invent a form of currency that would exist outside the power of governments to control it.
Paul Mampilly compares cryptocurrencies to online gambling. Paul Mampilly lost money years ago because he invested in companies that allowed Americans to gamble over the Internet even though it was illegal. The servers of these companies were based in countries that did not make the gambling illegal. Eventually, the United States government struck back at this threat to their law against online gambling. It added rules to the SAFE Port Act governing transportation. It became illegal for American banks and credit card companies to process payments for Internet casinos. Residents of the United States could no longer send funds to these sites or receive back their winnings. By wiping out the cash flow, the government squeezed these stocks so they’ve never recovered. To see more,visit here.
Paul Mampilly believes the government is beginning to do the same thing to cryptocurrencies, only it’s not just the United States. Every government in the world feels threatened by people using an independent form of currency. India is stopping cash from going to people who hold cryptocurrencies. China has banned domestic coin sites from operating, and recently made it illegal to for the Chinese to have accounts in foreign coin accounts. They’re also phasing out Bitcoin mining operations.
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