Hey, Gov’t Officials! Do You Still Think You Can Ban Bitcoin?

Ban Bitcoin Regulation
Last updated:
Author
Author
Juan M. Villaverde
Last updated:
Why Trust Cryptonews
Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews
Ad DisclosureWe believe in full transparency with our readers. Some of our content includes affiliate links, and we may earn a commission through these partnerships.

Juan Villaverde is an econometrician and mathematician devoted to the analysis of cryptocurrencies since 2012. He leads the Weiss Ratings team of analysts and computer programmers who created Weiss cryptocurrency ratings.
_____________

Source: iStock/jallfree

Dear government official,

If you’re a member of Congress, Parliament or even the erudite club called “G5 heads of state” …

And if you’re among those who still think you can shut down Bitcoin, Ethereum or other decentralized cryptocurrencies …

Then we have a simple message for you: It can’t be done.

You can’t subpoena the principals and haul them into court. Nor can you raid their offices, confiscate their assets and throw them into jail.

Because there are no such principals, offices or assets.

A decentralized cryptocurrency is available to everyone, but controlled by no one. It’s everywhere on the planet, but nowhere that you can reach or grab.

To bring down crypto, you’d have to pull the plug on the entire internet.

Or maybe you could do it by sabotaging the power grid and causing a global blackout.

I say “maybe” because as soon as you turned the lights back on, the crypto would still be there.

Chest-thumping and ‘Crypto night’

If you’ve been poking around a bit, you probably already know all this. You know decentralized cryptos are indestructible.

So you resort to another tactic.

You dress up as Superman. You gather a crowd. You exude imaginary crypto-killing powers. You declare “Crypto Night,” the end of crypto. And you scare the living daylights out of investors.

Bitcoin plunges, and you chuckle. But it’s not funny. In fact, frightened investors have repeatedly asked us about this precise issue.

As one reader wrote last week:

“Recently, President Trump and the U.S. Secretary of State made some hostile comments about Bitcoin. Shortly thereafter, the bottom fell out of the crypto market. The fact is that the U.S. government can put a stop to crypto (especially monetary cryptos such as Bitcoin) in a nanosecond.”

Not true. Cryptocurrencies like Bitcoin and Ethereum are unique. They’re fundamentally different from traditional fiat money like dollars and euros or soon-to-be-launched digital assets like Libra. No one can shut them down.

Never forget: Bitcoin was not created in a vacuum

This is not a new polemic.

Bitcoin evolved from a series of precursors that emerged in the 1980s and evolved in the 1990s.

From the outset, the goal was to create a network of participants who could exchange information over the internet with a unique kind of transparency:

  • Every transaction among them would be recorded.
  • Every account and every balance it contained would be visible to all participants.
  • And their network would be resistant to attack by any outsider.

But in the early days, this seemed like a pipe dream. How could any technology open access to nearly everyone and, at the same time, maintain protection from everyone else?

How could it fling open the doors to the insiders, deemed “the good guys,” while slamming them shut to the outsiders, considered “the bad guys.”

Proponents scratched their heads. They scrambled to find a solution. But they could not find a way to block “malicious actors” — let alone a “hostile” government.

Early Bitcoin prototypes, like Bit Gold and B-Money, were proposed. But they were never launched precisely because of this catch-22 dilemma: Developers could not find a way to make them both transparent to the public and invulnerable to government shutdowns.

We saw a similar challenge at the time with protocols that allowed users to share music, movies and other files over the internet.

As long as it was centralized file-sharing, relying on a single entity to run the system, you could put them out of business for violating copyright laws.

Then came BitTorrent. Its network was set up in such a way that there was no single point of failure. Users download bits and pieces of each file from a large number of users and rebuild the files on their own computers.

Thus, decentralized file-sharing protocols and cryptocurrencies emerged along parallel pathways.

Both systems have evolved over the past 20 or 30 years with the explicit purpose of creating a network of free, open, peer-to-peer transactions that are resistant to any form of attack from an outside intruder.

Now, we come back to the present and face the facts:

Even the most powerful government on the planet cannot put the kibosh on crypto assets any more effectively than they could with online file-sharing by the likes of BitTorrent.

Bitcoin price pullback is surprisingly shallow

It may be true that the fear of U.S. government hostility played a role in triggering the Bitcoin price decline that began in late June. It may also be true that more such hostility will be associated with a further correction.

But that doesn’t mean the government is the real cause. Nor does it mean this will last very long.

Truth be told, the recent Bitcoin correction is surprisingly numb according to our models. We know this by measuring how far it went up and by comparing the recent decline to previous corrections of Bitcoin history.

Indeed, the crypto market correction was already well underway before Mr. Trump or Mr. Mnuchin made their mildly anti-Bitcoin comments. In fact, there was no correlation between the timing of their comments and the general direction of prices.

And let’s never forget one more thing …

We’ve been here before

We know that Chinese authorities, and China overall, have a lot more influence on the crypto marketplace than Washington and the U.S.

We know that, in early September 2017, Chinese authorities moved to ban the trading of cryptocurrencies — one that triggered a Bitcoin correction of about 40%.

But we also know what happened next: After making a low in mid-September, Bitcoin turned right around, blasted off and soon hit its all-time high of nearly $20,000.

Today, some still argue high Bitcoin prices are merely the result of misinformed speculation.

But that argument ignores the facts.

  • Bitcoin’s hashrate, a measure of the blockchain’s overall security, is at all-time highs.
  • Bitcoin’s on-chain transactions, a concrete measure of usage, is also near all-time highs.
  • Bitcoin’s technology has been upgraded and is now significantly more efficient than it was in late 2017.

And it all adds up to a network that’s more robust today than ever before in its history.

The evidence tells us that governments are not only incapable of destroying decentralized crypto assets, but they’re also incapable of putting a stop to their growth.

Conversely, there is no evidence that Washington has any intention of even trying. After all, why try to ban something without any feasible way of enforcing it?

As Bitcoin advocate Andreas Antonopoulos has said many times before …

“You cannot ban Bitcoin in your country. You can only ban your country out of Bitcoin.”

____

Read more:
Confirmed: India to Consider Imprisonment for Holding Crypto
What Could Kill Bitcoin and How Possible it is

More Articles

Blockchain News
Fireblocks Sets Up Tokyo Office to Strengthen Asia-Pacific Presence
Jai Pratap
Jai Pratap
2024-12-12 03:55:06
Blockchain News
Russian Scientists Say They’ve Developed a Solution to ‘Fight BTC, ETH-powered Crime’
Tim Alper
Tim Alper
2024-12-12 03:00:00
Crypto News in numbers
editors
Authors List + 66 More
2M+
Active Monthly Users Around the World
250+
Guides and Reviews Articles
8
Years on the Market
70
International Team Authors