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Key Takeaways

• Chair of the US Banking Committee has instructed a ban on all cryptocurrencies
• Many declare that crypto is resistant to authorities shutdowns, however this is solely true immediately
• By attacking the ecosystem and the capability to entry it, crypto may be curtailed considerably by lawmakers

Bitcoin can’t be shut down, so the saying goes. But this misses the point.

Firstly, let me be clear and affirm that this mantra is true, technically a minimum of. Bitcoin exists on the Internet and therefore it is resistant to being shut down. Unless, in fact, you by some means shut down the Internet. But for all intents and functions, Bitcoin is decentralised and exists in the on-line world, a feat of know-how that makes it resilient to being restrained.

Bitcoin can’t be shut down immediately, however not directly is a special story

But whereas a direct shutdown of the blockchain is not possible, governments can, a minimum of theoretically, dent Bitcoin closely and curtail its adoption by the lots. It may not qualify as technically shutting it down, and I’m not commenting on the chance that this occurs, however there is little doubt that if a concerted sufficient effort is made, an assault by lawmakers on Bitcoin may very well be devastating.

We want solely take a look at the prevalence of centralised entities in the area. While Bitcoin itself is decentralised, to ensure that the lots to entry it, the overwhelming majority go by way of centralised corporations corresponding to Binance or different exchanges. And what occurs if governments go after these corporations?

These corporations might be pressured to abide by the legal guidelines. Sure, decentralised exchanges (DEXs) will stay, and like Bitcoin itself, are resilient to being immediately shut down. But would you count on Bitcoin to attain mainstream success and proceed to develop right into a authentic monetary asset if DEXs have been the solely possibility?

Not solely would establishments be reluctant to pursue this route, however they may additionally simply be banned from holding it.

US Banking Committee Chair recommend banning cryptocurrencies

I write this text now in the wake of the story which emerged relating to the US Banking Committee Chair, Sherrod Brown, suggesting a ban on cryptocurrencies.

Brown mentioned:

“I’ve already gone to the Treasury and the Secretary and asked for a government-wide assessment through all the various regulatory agencies. … The SEC has been particularly aggressive, and we need to move forward that way and legislatively if it comes to that.”

It has been scoffed at in some quarters, however it’s price being attentive to. The US is the monetary capital of the world. Were the SEC to come back out and ban it, this might have a seismic influence.

Think of the chunk of the market that may very well be forbidden from holding Bitcoin – establishments, pension funds, public corporations, and many others. Or all the infrastructure that can be torn down, corresponding to exchanges.

On the flip aspect, it does stay a distant risk. And getting again to my point earlier about how folks overlook the potential for governments to shut Bitcoin down, Brown did acknowledge that “We want them to do what they need to do at the same time, maybe banning it, although banning it is very difficult because it would go offshore, and who knows how that would work.”

Final Thoughts

I’m not predicting any type of demise for Bitcoin or crypto off the again of this. I simply suppose that too many overlook how damaging governments may be in the direction of the world’s greatest cryptocurrency. 

Sure, the fantastic thing about the blockchain is that it can’t be shut down immediately. But not directly? That is a special story. Governments carry an excessive amount of energy to be written off as “irrelevant” in terms of Bitcoin.

So far, there is nothing to suppose that nations corresponding to the US will make such drastic strikes to ban crypto. But after a torrid 2022 that has seen scandal after scandal rock the area, feedback corresponding to Sherrod Brown’s will not be shocking. 

In the distant risk that these phrases have been ever put into motion, it could be silly for buyers to write down it off as a benign improvement for crypto.