California has the largest economy in the United States with a $3.4 trillion GDP in 2021. Its economy ranked fifth in the world, larger than India, the United Kingdom, and France.
It is also the home of Apple, Meta Platforms (Facebook, Instagram, Whatsapp), Alphabet Inc., and 10% of Fortune companies. California is also the first state to follow the path laid out by President Joe Biden regarding cryptocurrency last March.
Governor Gavin Newsom signed an executive order calling on state agencies to work hand in hand with the federal government to start considering and crafting regulations for digital currencies.
The order also requires officials to find secure means to adapt the use of cryptocurrencies. Widely accepting and using digital currencies can open new opportunities such as new companies and job opportunities fostering economic growth.
What Is Cryptocurrency?
Cryptocurrency is a digital currency based on a decentralized network distributed across a network of computers. This virtual currency is secured by cryptography and the decentralized network allows cryptocurrency to operate without government interference, control, and manipulation.
The word crypto refers to the encryption algorithm used to protect this entity. Cryptocurrencies enable secure and fast online payments between merchants and consumers without the need for third-party intermediaries or providers of high-risk merchant accounts.
Any form of digital currency can be mined or purchased from crypto exchanges like Bitcoin and Ethereum. Although most merchants prefer other forms of cashless transactions like credit card payments set up by high-risk merchant account processors, the ballooning value of cryptocurrencies made them popular daily transactions and trading instruments these days.
Cryptocurrencies are legitimate in the European Union and in the United States, the most valuable cryptocurrency, Bitcoin, is available on Chicago Merc or Chicago Mercantile Exchange.
New Efforts to Examine Cryptocurrency
Today, about 16% of Americans have invested, traded, and used cryptocurrencies in transactions (Perrin, 2021). Biden and Newsom’s orders will help legalize the cryptocurrency technology and drive this innovation to the mainstream, according to Hillary Allen, a finance professor at American University in Washington, D.C.
She further commented that investors will also benefit from this approach and create more markets for crypto. On the other hand, Allen said that the state government should seek simpler technological solutions rather than relying on the complex and inefficient technology of cryptocurrency, which will not create the best result for the consumers and residents of California.
California’s approach will not only examine the benefits and consequences of cryptocurrency but also take the step towards embracing technological advancements.
Oftentimes, the government lags behind technological innovation, so Newsom’s order is just the start of establishing organized, secure, and comprehensive regulations for digital currency.
Recognizing the potential of cryptocurrencies will not only make the government better but also get ahead of the curve, said Amy Tong, California’s Government Operations Agency secretary.
California may be the first state to establish a comprehensive approach to cryptocurrency, but other states have already introduced cryptocurrency to their residents like Ohio.
Last February, Colorado Governor Jared Polis also stated that the state will start accepting crypto payments for government services and transactions later this year.
Perrin, A. (2021, November 11). 16% of Americans say they have ever invested in, traded or used cryptocurrency. Pew Research Center. https://www.pewresearch.org/fact-tank/2021/11/11/16-of-americans-say-they-have-ever-invested-in-traded-or-used-cryptocurrency/