In light of President Trump, and treasury secretary Steve Mnuchin’s recent negative comments on Bitcoin fetched by CryptoMood sentiment app, a lot of fear has sprung up in the cryptocurrency community around potential regulations or even a ban from the US government and other governments. But can they actually do it? The answer is a lot more complex than you might think.
Decentralization Makes A Firewall Block Impossible
Perhaps the most wonderful aspect of Bitcoin is its decentralized nature. It’s one of the key founding principles of it. It’s what makes it such a key player in the fight against authoritarianism. Decentralized entities are always harder, if not impossible to ban due to their points of failure being spread across many often unknown, untrackable locations. As opposed to a centralized entity like Facebook/Libra, which operates out of one centralized server. China is infamous for banning western social media sites like Facebook, Twitter, Google, etc. They’re able to do this by firewalling off the centralized servers of said companies.
There are over 1,000,000 unique individuals mining Bitcoins in countless nations around the world. It would be a monumentally impossible task for any government to individually track down each and every one of them and block them. Even if say, China banned all Bitcoin mining activity in its own country, the Bitcoin network would comfortably survive with all the other miners around the world. Not to mention the impossibly exhaustive task of tracking all miners. So from a technological perspective, there’s nothing any government can do to ban or even regulate the use of Bitcoin.
But What About A Legal Ban?
Although a firewall ban on Bitcoin would be impossible. There is another option governments could pursue: a legal ban. Rather than blocking the technology, governments could simply introduce new legislation that prohibits or at least severely restricts individuals from trading or owning cryptocurrency. India is already exploring this option along with several other countries. The possibility of this varies from country to country. The USA would have a much harder time reaching consensus given the polarization and divide within the government. Whereas a communist country like China could instantly pass decisions much easier. But regardless of jurisdiction, there remains a much bigger, fundamental problem with governments who want to ban Bitcoin: enforcement.
It’s one thing to say you can’t use something. It’s another to actually enforce it. And governments around the world have been historically bad at enforcing any kind of ban. The government tried to ban alcohol in the early 1900s. Not only was it ineffective in stopping alcohol use, it actually backfired as it simply pushed the activity underground where it festered and became even more uncontrollable. Same goes for drugs, illegal downloads, etc. Governments have banned it. People who use it continue to use it. The same will be the case for Bitcoin. In fact, it may even have the opposite “Streisand Effect” where the masses see the negative publicity and develop a sudden interest in it.
Do Governments Even Want To Ban It?
A better question to ask yet is if governments even want to ban it in the first place? There are some authoritarian dictatorships who don’t value their country’s development that instantly feels threatened by it and try to ban it. But contrary to popular belief, not every government sees it as an impending threat to upend their sovereign currency. In fact, many nations have spoken rather positively of Bitcoin, cryptocurrencies, and blockchain technology in a broader sense.
The prime minister of Malta had a speech where he praised blockchain technology and reaffirmed Malta’s commitment to optimizing it. Estonia has also taken various steps to ease crypto regulations. There’s huge potential for innovation and growth with this technology, and any country who embraces it will reap the benefits. Those who reject it will inevitably fall behind in today’s highly competitive global economy. Not to mention the tax revenue any country can gain by taxing it.
Since Trump’s anti-Bitcoin tweet there’s been a lot of fear and panic in the crypto space. But banning Bitcoin is a lot more complicated than anyone might expect. It’s impossible to block it, and unrealistic to enforce any kind of ban on it. It’s a game-changing technology and those who fail to adapt will inevitably fall behind in the global economy. Whatever steps governments around the world try to take to ban it, restrict it, block it, one thing is clear: Bitcoin, cryptocurrencies, and blockchain technology is here to stay.