The government to regulate it. However, if there is

The I.R.S fears their ability to play a effective role in the regulation of cryptocurrency. While, there is currently an estimated $500 billion dollars of annually non reported income, it would be expected to significantly increase due to crytocurrency. Crytptocurreny is made possible through the use of blockchain. Blockchain allows a higher level of anominity because transactions are only linked to a specific electronic address. This particularly allures, the underground economy which is currently made possible through physical cash transactions. If crytocurrencies become a widely used medium to exchange transactions, there is no neccessary need for the government to regulate it. However, if there is no government regulation of this, then they are missing key opportunities to tax these transactions. Many government agencies fear that cryptocurrencies offer people another method for which they can hide their income. Their argument suggests that government finances woud decrease due to less income being reported and taxed. However, the real question is, “how long is Bitcoin and other cryptocurrencies projected to last?” Many opponents say that cryptocurrencies are simply causing a market bubble that is bound to pop eventually, if not soon. The “bitcoin bust” could have the same devasting effect as when the dotcom market crashed. Bitcoin only started in 2008 and recieved quite a bit off credibility starting with an drastic increase in stock market prices around 2003 and in 2004. It is only a matter of time before one can determine the importance and significance Bitcoin will have in the transaction of services. If Bitcoin is truly unstable, federal agencies and banks have nothing to fear in the short run. However, if Bitcoin and perhaps other emerging crytocurrencies over take the medium of cash or credit transactions, it will be become a force to be reckon with. Banks and federal agencies see a looming threat and as a result are trying hard to impose restrictions on this emerging market. Many countries such as China have gone as far as making the use of virtual currencies in business illgeal so as to protect their monetary system.