For years, investors have feared that governments would impose regulations on Bitcoin (BTC 0.48%). Some concerns are valid, when considering that countries like China have banned the use of Bitcoin and Bitcoin mining. The lack of current regulation has also led some investors to believe that governments will act swiftly to introduce new legislation.
However, when comparing regulatory risk between Bitcoin and some of the Nasdaq's heavyweights, such as Meta (FB +0.12%), Microsoft (MSFT 0.25%), or Apple (AAPL +0.01%), there is a clear trend of Big Tech companies consistently finding themselves in the crosshairs of government regulation.
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The end of Big Tech?
The rise of Big Tech since the Great Recession has been extraordinary. Since its low in November 2009, the Nasdaq increased roughly 1,000% when it hit a high in October 2021.
Yet this growth might be coming to an end, now that the world in general and governments alike are beginning to realize that the growth of these tech giants relies on some nontraditional methods.
These companies employ a business model that relies on collecting users' data, promoting polarizing content, and exploiting our own human nature to become addicted to serotonin boosts that come with getting "likes."
Big Tech CEOs from companies such as Alphabet's (GOOGL +0.56%) Google, Amazon (AMZN 0.78%), Microsoft, Meta, and Apple have all become familiar faces in Washington, D.C., and in courtrooms around the world because of their seemingly constant hearings with legislators over their business practices. Amazon is currently involved in four lawsuits. Apple has found itself in three active investigations. Google leads the way with five lawsuits. And Meta is in the midst of four investigations with legislators.
In the U.S., most of the allegations are related to a series of antitrust lawsuits that have pitted Big Tech against the Federal Trade Commission, state governments, and even the Department of Justice.
These lawsuits aim to rein in the monopolistic power Big Tech has amassed, comparable to the antitrust trial Microsoft faced in the late 1990's. If the government's approach to business overreach in the past is any indicator of the future, the end of Big Tech might be closer than it appears.
Recently, one of Congress' most vocal members of the House Antitrust Subcommittee stated that legislation to rein in Big Tech is near completion. Ken Buck, a Republican representative from Colorado, told Time in April that he expects Big Tech reform to be on President Biden's desk by the end of the summer.
Advocates for the bill hope that it will contain some language that would break up current companies into smaller ones, limit their ability to make new business acquisitions, and put an end to stock buy back programs that these companies use to buy their own stocks when they think their company is undervalued and then sell for a profit at a later date.
Why Bitcoin?
Despite being shrouded in controversy, Bitcoin will probably never see this kind of legislation and regulation. Fears over regulation of Bitcoin might be unwarranted or at least misplaced. Because Bitcoin is one of the most decentralized cryptocurrencies, it is naturally more difficult to regulate.
Technically speaking, governments can't truly regulate or even ban Bitcoin. They can shut down exchanges, they can outlaw mining, or they can increase taxes, but they will never be able to actually ban the purchase or selling of Bitcoin. Thanks to virtual private networks and decentralized exchanges, those who want Bitcoin have many options that governments can't control.
In addition, governments around the world are beginning to realize that citizens and companies want to use Bitcoin. Instead of introducing legislation that curbs the growth of Bitcoin, lawmakers are creating incentives around the new crypto economy and the use of Bitcoin.
Germany, for example, recently passed some of the most crypto-friendly tax laws in the developed world. States like Colorado in the U.S. are allowing citizens to pay taxes in Bitcoin. And just recently, the Central African Republic made Bitcoin legal tender, becoming the second country in the world to do so.
Current trends seem to signal that Bitcoin is in a similar position that Big Tech was roughly a decade ago. Post-Great Recession, a new way of life slowly unfolded. Everyone now has a smartphone. Everyone has an Amazon account. Everyone uses Google, Facebook, Instagram, and Twitter.
Bitcoin has a chance to catapult into the public's view over the coming decade. It provides true utility to send payments instantly across borders. It is a hedge against widespread inflation. And most importantly, as much as governments might want to regulate it, Bitcoin's decentralization will protect it from any type of detrimental legislation.
