A lot of people who go down the rabbit hole of cryptocurrency get some tunnel vision about it. And anything that poses the possibility that Bitcoin could be banned is immediately dismissed.
They could never shut it down! So they claim.
But, what's the reality of this?
And, what kind of big speed bumps could come up in the future of Bitcoin?
Let me give you my personal opinions on the matter. Can government stop it? What kinds of issues could arise here? Is it possible that Bitcoin goes away at some point?
Crypto Has The Potential To Remake The Role Of Government
Let's look beyond the financial and investment aspect of this. Truth is...
Bitcoin and crypto is going to be a BIG deal. A really big deal.
It can fundamentally change the role of government in our lives. This is because it lessens the role of government when it comes to money.
It disconnects money from government.
It means money can no longer be used as a control mechanism.
Will this change happen without push back? Of course not. They're going to fight to maintain control.
This Could Really Impact The United States
It is my personal opinion that the U.S. could be impacted more than any other country. I say this with no glee whatsoever. I am an American. I don't want my country to suffer. But, here's the reality, as I see it...
The United States has a pretty unique position right now in world affairs because our currency - the US dollar - is the reserve currency of the world.
The dollar is necessary for a lot of world trade.
This helps prop up the value of our dollar. Our Federal Reserve just keeps printing dollars and it hasn't impacted the value of the dollar as much as it should and that is only because other countries need the dollar to trade.
The U.S. has, in my opinion, abused this position. The U.S. military-industrial complex and economic powers like to go around and try to re-make the world to maintain this empire. We start wars, we provoke conflicts. And we use economic sanctions to enforce our will.
Other countries don't really like it so much.
And not only that, Bitcoin has the power to not only disconnect monetary control from other governments, but to remove this worldwide control that the U.S. enjoys right now.
If our dollar becomes less necessary on the world stage, then those dollars come home again. Which leads to massive inflationInflation is the rate at which the value (or buying power) of a currency drops over time. The result is that the prices .... Some say... hyperinflation. And the potential of the collapse of the US dollar itself and U.S. dominance over the world economy.
The U.S. government and banking cartel has the most to lose.
So, what will they do about it?
Can They Shut Down Bitcoin?
Answer = no.
But, they can make it much harder to use.
Bitcoin is decentralized. The network is spread out over the world in numerous different countries.
Depending on what you consider to be a country, there is anywhere from 196 countries on the planet up to around 250.
There is simply no way you'll get them all to act in unison to ban Bitcoin. It'll never happen.
Some countries have already attempted to ban Bitcoin. To the point where if they catch you using it, you can face imprisonment. Yet, it obviously has had essentially no effect at all.
All a government can really do is ban the use or holding of crypto and/or ban miners. All that does it makes it harder to use, but it does nothing to disable it. And, in many countries where they have done this, you still have people running black markets. Either people will run miners under the radar or people will buy/sell Bitcoin using peer-to-peer markets.
What if a "big" country like the United States tried to do the same thing? Well, the effect would be the same. It makes Bitcoin harder to use, but would do nothing to shut down the network.
What Government Could Do (And Could Very Well Happen)
You cannot shut down Bitcoin without shutting down the whole internet. And that's just not going to happen.
But, a government could ban miningIn the world of crypto, mining is the process of verifying transactions on a blockchain. In other words, mining is what ... and it could ban crypto exchanges.
For instance, the United States government could attempt to paint crypto as a tool for terrorists (which they've done before, despite being provably untrue) and then go so far as to ban exchanges and ban the use of Bitcoin.
Would this mean that people no longer hold Bitcoin?
No. It would just mean that it will be hard to get money in and out of it. It makes it harder.
But, here's the reality of it...
- There's decentralized exchanges that simply cannot be turned off.
- You could use exchanges based in any other country, even if you had to use a VPN to make it look like you weren't in the U.S.
- It won't be hard to find banks around the world willing to work with you.
Truth is, trying to ban Bitcoin would be a fruitless game of whack-a-mole for any government.
But, could they try?
Sure. And it very well may happen at some point. Like I said, governments are not just going to lay over and let their control of the money supply be taken away.
Such moves could hurt the market price of Bitcoin. Perhaps quite substantially. But, disable it? Nope. Just not possible.
Plus, history is rife with examples of government bans simply not working at all. Ever seen the story of US prohibition? 😉
What I Believe Will Happen
The prospect of government bans is definitely real. It is definitely a risk. You can't rule it out.
But, the question is... will they?
Even a basic understanding of this asset would tell a reasonable person that it is a waste of time to try to ban it. It simply would not be a workable policy. While it would present barriers, it would do nothing to stop it in the long run. Plus, it would just make it easier for other countries to gain a major competitive edge.
Now, government isn't always reasonable. In fact, it often does the unreasonable thing.
But, let's not also forget...
Bitcoin and crypto in general is a new asset class where adoption and the network effect is growing quickly. There's a lot of financial incentive to it. There's also an aspect of economic competition to it.
These are innate human desires. No government system can change human psychology.
You've got big interests coming into crypto. There's money to be made. Wall Street is going to make a lot of money on this and they know it. Major corporations are now putting portions of their reserves into crypto. Coinbase is going public.
Does this sound like something you just... turn off?
Governments are going to want to remain competitive in this fast-growing space, too. For instance, the U.S. would never want China to be able to control a majority of the miners. I could see a very real geopolitical battle here between the U.S. and China, with Bitcoin in the middle.
You think they're going to be able to ban that? You think they'd even want to?
Personally, I think not.
While some governments might try to ban it, I think most will attempt to co-opt it into a system that benefits the government. They'll try to regulate it and tax it, but they won't try to ban it.
In fact, as long as they don't stifle innovation, I think regulation in this space is just fine. Necessary, in fact.
What Does The Future Of Crypto Look Like?
This is just me speculating, but here's me looking into the crystal ball...
I think, eventually, the whole economy of the world changes to crypto. It will become as normal as email and the use of the internet. In fact, even MORE normal since the over 2 billion people of Earth that currently have no access to modern banking will suddenly be on an equal footing with the people on Wall Street.
I think we will move into a world of currency competition. You will have government money... and the "people's money". Centralized and decentralized. Working in tandem. And there will be an ongoing competition and tug-of-war. But, eventually...
Decentralization wins. And I think money will be disconnected from government.
I also think it is possible that Bitcoin eventually falls into a role of reserve currency.
Mind you, this could be a 20-30 year transition. But, a lot of it will take place this decade. The use of crypto will be very normalized this decade, despite there still being digital fiatFiat, or fiat currency, is a currency that exists and has value merely because it's home government says so. A fiat curr... currencies.
Eventually, all the markets will work this way. Stocks will be traded on decentralized markets. Property records and other assets will be transferred via blockchainBlockchain is the technology that underlies cryptocurrency. Not just Bitcoin, but all of them. Blockchain is a kind of .... This is just how things will work.
In fact, I think a whole new level of economic activity worldwide will develop - in ways we probably cannot yet forsee.
I mean, over 2 billion people will have access to modern finance where they do not currently. Not only that, it will help a whole new world of digital economy develop.
This decade will be one of rapid transition. There's a war afoot. Between those who wish to centralize control and those who wish to decentralize it back to the people. As a parallel conflict, you're probably going to see geopolitical rebalancing take place around the world. We can only hope that doesn't evolve into a "hot war" with bombs dropping. It could be chaotic.
But, after that, I think we have a new period of human prosperity and freedom. We just might have to get over some speed bumps in one piece first.
The Role Of Bitcoin In The Future
Bitcoin was first. And it is growing a crazy amount of network effect. So, does that make it unstoppable?
But, there's always a chance that Bitcoin will not end up being the big kahuna anymore. I actually wouldn't be surprised at all if, in time, other "coins" surpass it. I actually think Ethereum could surpass Bitcoin in market capThe market capitalization - or market cap - is the total dollar value of all of the coins of a particular cryptocurrency... sooner rather than later.
Other things will come along.
The network effect is real, tho. There's really a few options here:
- Bitcoin's capabilities adapt to the point where it can be a full, daily currency for the world. In my opinion, this probably won't happen, but it could.
- Bitcoin cements itself as "digital gold" and eventually becomes a world reserve currency, backing up the value of other digital assets and cryptos. It will take the place of the US dollar now as world reserve, but this time not centrally controlled.
- Bitcoin is surpassed altogether and something else takes on this role.
Those are the options, as I see it.
And I think it will be either #2 or #3.
Potential Speed Bumps For Bitcoin As Things Grow
We've already discussed efforts by governments to stop Bitcoin. As I said, I think efforts like that will happen, but will not stop it.
But, it isn't as if that's the only potential issue.
One potential geopolitical issue would be control of miners.
For instance, if a majority of mining power for Bitcoin is in China, that would pose a concern for nations like the US. Could China then control Bitcoin?
This is not a moot point, but one that can be overstated. Mining power is a pretty dynamic thing. That said, I do think it is a legit concern. There's always the idea of a 51% attack.
So, I do think that one of the best ways to keep Bitcoin on the right track is to ensure that the network power is spread out around the world and not allowed to be overwhelmingly controlled or influenced by any nation-state who might want to abuse that fact. It is possible that that becomes a legitimate geopolitical issue in the future.