Do you think Bitcoin will have a positive or negative impact on the government of Canada and the Bank of Canada? What do the results mean for the future of cryptocurrencies in general?
However, if it were not for its decentralized nature, it is unlikely that bitcoin would have attracted its interest.
Bitcoin, in any case, does not pose a direct threat to existing payment networks because these are well-established and entrenched within the mainstream financial system. Moreover, Bitcoin is decentralized by design, meaning no central authority regulates its issuance or transactions.
This means that there can be no government or central bank interference with gold and other precious metals. Without such an interference, the central banks cannot devalue the currency as they would otherwise be able to do; if not for this feature of decentralization, it is unlikely that bitcoin would have attracted any interest at all from those outside the financial sector.
Bitcoin’s ability to remove the need for central banks makes it attractive, but it also means that Bitcoin cannot succeed without government support. Without any one party controlling the network, there must be an inherent trust between all participants in the system to transact without fear of fraud or counterfeit. This represents a fundamental difference between traditional payment networks (Visa) and Bitcoin.
This inherent trust in existing financial institutions has allowed them to become entrenched in the mainstream, which means that for bitcoin to gain mainstream adoption, it must replace or co-exist with these traditional institutions.
However, if users view government-issued currencies as nothing more than electronic transactions (and not representative of some arbitrary value), there is no need to replace the traditional system. Instead, this would allow bitcoin transactions to become another type of transaction that can be accomplished without using a central bank currency. Read more at profit-builder.org
The Bank of Canada has not had an official opinion on this topic until recently. Still, it appears they are taking a more proactive role in developing an opinion on Bitcoin. The Bank of Canada should be commended for its outreach to the Bitcoin community, both academic and professional. Still, they have yet to release their official opinion on Bitcoin so far. If nothing else, this indicates that they are taking Bitcoin seriously enough to investigate it in depth before releasing an initial assessment.
The positive impact that Bitcoin has had on the Canadian financial community has been to bring attention to the underlying protocols that have allowed Bitcoin, Litecoin, Dogecoin, and others to exist.
This decentralized, trustless system will allow other future innovations to take advantage of it in ways similar to how Bitcoin benefits today. So many people are interested in this research is undoubtedly has a beneficial impact on the community.
What is the impact of Bitcoin on Canada’s business activities?
Even with the limited rollout of Bitcoin exchanges, there are already entrepreneurs that have opened up businesses to accommodate Canadian users (such as CaVirtex, QuadrigaCX, and others). In addition, the increased awareness it brings to BlockChain technology has also led to the creation of several local start-ups (such as Catallaxy and Ethereum) that are creating valuable products.
As Canada is a global leader in financial services, this activity benefits the Canadian economy; however, with such a limited rollout of Bitcoin exchanges, it pales compared to what is happening south of the border.
What is the regulatory and supervisory approach of Canada to these new developments?
The Canadian government has been quite active in studying Bitcoin but has not released any official policies. With such a limited rollout in Canada, this lack of formal regulation is one of the reasons that few exchanges exist (outside of New York State).
The critical difference between the Canadian approach and that of other countries is that Canada has not taken a restrictive approach to Bitcoin. The Canadian government has made it clear that they will not regulate an entity unless it poses a threat to the country’s stability. Furthermore, similar to FinCEN in the US, They have also stated that they are more interested in regulating individuals/businesses that abuse the system rather than regulating or prohibiting the use of Bitcoin.
The Canadian government has also been quite open to working with entrepreneurs and community members to understand better how it can benefit them, which is why several start-ups are operating in Canada today. This open approach has been welcome news to many entrepreneurs that wish to develop products but have been frustrated by other countries’ lack of engagement. The only restriction the Canadian government has imposed is a requirement for start-ups to obtain a Money Services Business (MSB) license before operating, which few continue to operate under once they are established.