Can Governments Really Afford to Ban Bitcoin?

The US government recently opened its doors to blockchain and cryptocurrencies with due regulation and vetting. If we look elsewhere, we find a huge amount of international crypto-related activities. The global crypto trading boom combined with the backing of banking superpowers and other benefits has forced people to think. The request has transitioned into a demand. A demand for an answer to the above-stated question – “Can governments really afford to ban Bitcoin?”

Naysayers of Bitcoin Implementation

China’s decision to impose a total ban on Bitcoin and cryptocurrencies altogether may have come as a shock to many. For others, it was a matter of time with the Chinese government’s tendency to maintain a tight rein over all things necessary. Bitcoin’s decentralized nature is an antidote to corruption and governments trying to bestow more powers to their central banks. 

Further digging will reveal some other nations have banned cryptocurrencies as well or at least tried to. There are still several nations that impose a complete crypto ban including Ecuador, Algeria, Morocco, Egypt, Nepal, Bangladesh to name a few.  Even major players in the global economy like India and Russia kept a complete ban on cryptocurrencies a few years ago. 

Why Governments Can Not Afford to Ban Bitcoin and Blockchain?

The global surge in cryptocurrency has however forced most countries to adapt and accommodate. While still not accepted as a legal tender like El Salvador, crypto trading is legal in most countries. The most significant contributor behind this change of attitude is the inherent advantages of cryptocurrency and the underlying technology- blockchain.

The very roots of business or commerce thrive on 2 factors- sales and marketing. Crypto payment processors are much cheaper, faster, and reliable than 3rd party payment processing for cross-border payments. Blockchain’s decentralized ledger sharing technology is invaluable in countless domains.

Also Read: US$2 Trillion Economy: Bitcoin Mania and the Crypto Payment Processor Story

The Money-Laundering Angle

A large section of bitcoin or crypto critics point their finger over its involvement in illicit illegal activities or funding criminals. Bitcoin had a poor reputation. To the general public, it was the prevalent non-traceable medium of transaction for ransom payments to cybercriminals and the Dark Web. 

Quoting Senator Elizabeth Warren:
“Cryptocurrencies undermine the government’s ability to maintain robust economic growth over time…Online theft, drug trafficking, ransom attacks, and other illegal activity have all been made easier with crypto. Experts estimate that last year more than $412 million was paid to criminals in ransom through cryptocurrencies.”

While the aforementioned statistic was probably true, she and other critics conveniently skipped the bigger picture. An amount ranging between USD 800 billion and 2 trillion undergoes money laundering each year through fiat currency, as per UN reports. The amount is over 400 times the ransom crypto payments. In reality, cryptocurrency is used for 0.34% of global money laundering transactions.

Control: The Actual Reason behind the Bitcoin Ban

Contrary to popular belief, governments can actually trace bitcoin transactions. Blockchain records are transparent and immutable, and with a bit of effort, each transaction is traceable and accountable. 

A Darkside ransomware attack had forced a shutdown and ransom payment of 75 bitcoins or $5 million from US oil energy company Colonial Pipeline. Within a month of the attack, the US Department of Justice announced the recovery of 63.7 Bitcoins from East European hackers, the perpetrators of the crime. This proves that bitcoin and the blockchain network are actually traceable. 

The actual reason behind all these activities is “Control”. Governments have the authority to regulate a nation’s economy. They have the ability to manipulate fiscal and monetary policy. Often at times, the decision-making gets flawed due to lobbying and an apparent lack of empathy. The Financial Crisis of 2008 is a great example.

The Chinese are racing forward to establish the Digital Yuan, a central-backed digital currency(CBDC) that can be controlled and monitored. The decentralized brainchild of Satoshi Nakamoto is a cause of concern for the ones willing to exploit their power to manipulate monetary growth and policies to their whims- with zero accountability or care for the lives affected. 

Also Read: The Benefits of Blockchain Implementation in Cybersecurity

Wrapping Up

Despite initial setbacks, bitcoin adoption is inevitable. The governments worldwide are rallying worldwide for the legalization to capitalize on the global crypto trade and blockchain’s enormous potential. The ones still continuing to disfavor the prospect with their still-ban strategy are simply feeling threatened by the fear of losing control. To conclude, stalling the technological evolution of currency will cause nothing but enormous setbacks. And, lest we forget Darwin’s immortal quote (originally termed by Herbert Spencer)- “Survival of the Fittest” applies here as well.