Many people believe that the government will shut down Bitcoin, but the chances of the government being able to ban it are low.
There is a good reason why many people believe that the US government will ban Bitcoin.
Bitcoin poses a serious challenge to the government’s ability to print money out of thin air and mandate its usage, which is a significant source of power.
This is so that Bitcoin may eliminate the need for central banks and their confetti currencies by granting monetary sovereignty to the person.
That’s a major achievement.
It is a historical moment that fundamentally modifies the existing order between the rulers and the ruled. It’s comparable to the development of the Internet, printing press, and gunpowder.
It goes without saying that the US government would wish to defend its business against a monetary rival who was intruding on its territory, much like the mafia does when a rival enters its territory.
Whether they will succeed is the $64,000 question.
Great Austrian economist and proponent of the free market, Friedrich Hayek, famously said:
“I don’t believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can’t take it violently out of the hands of government, all we can do is by some sly roundabout way introduce something that they can’t stop.”
Governments are incapable of stepping down peacefully by nature. The only option left is to “some sly, roundabout way introduce something they can’t stop” if forcibly stripping them of their authority is out of the question.
Is Bitcoin the answer?
Many people believe that the government will shut it down, thus the response is “no.”
Can Anyone Shut Bitcoin Down?
Bitcoin lacks a single point of failure and a centralised authority.
Instead, it operates on a decentralised, voluntary, and expanding network of around 15,384 machines, many of which are cleverly hidden, across close to 100 nations.
There is no central site for a SWAT team to raid with Bitcoin. There is no CEO to be detained. Governments around the world have no choice but to engage in an ongoing game of whack-a-mole.
Bitcoin wouldn’t stop working in the Southern Hemisphere even if the US and Russia fought a full-scale nuclear war, obliterating the majority of the Northern Hemisphere.
In other words, Bitcoin cannot be destroyed by a government.
Every government in the world would need to work together successfully in order to simultaneously shut down the Internet everywhere and keep it off indefinitely in order to have any hope of even trying to stop Bitcoin.
Small portable solar panels can be used to power the network’s computers, and radio signals can still be used to communicate the Bitcoin network even in that improbable situation. Furthermore, the Bitcoin network is continuously sent to Earth through satellites.
In conclusion, Bitcoin is truly decentralised, strong, and growing more so every day. Bitcoin seems unstoppable, barring an inevitable, universal return to the Stone Age.
The secret is now out. No government can compete with Bitcoin.
If They Can’t Shut It Down, Won’t They Ban It?
A number of countries have attempted to outlaw Bitcoin, including Algeria, Bangladesh, Bolivia, China, Ecuador, Egypt, India, Iran, Kyrgyzstan, Morocco, Nepal, Nigeria, Saudi Arabia, Thailand, Turkey, and others. However, as adoption increased in those nations, they all failed miserably.
The US government might try to ban Bitcoin.
The US president could outlaw Bitcoin with an executive order.
As you may recall, Executive Order 6102 prohibited American citizens from owning gold from 1933 until it was overturned 41 years later.
However, three factors make that result implausible.
Reason #1: Code Is Protected Speech
Simply put, bitcoin is computer code.
According to choices taken by US federal courts, computer code is akin to First Amendment-protected speech.
However, as the Covid panic, the War on Terror, and the War on Drugs have all shown, the Constitution is not a trustworthy defender of rights. Therefore, I wouldn’t just rely on the US Constitution to safeguard Bitcoin.
However, prior decisions treating code as being equal to free speech make any attempts to outlaw it more difficult.
Reason #2: Regulatory Clarity Already Exists
Bitcoin is classified as both a commodity and property by the US government.
The regulatory and tax frameworks for Bitcoin have been made apparent by the IRS, SEC, CFTC, and other federal agencies.
This has aided numerous significant US businesses, including significant financial institutions, in embracing Bitcoin. Reversing these rules would face strong opposition and be difficult to put into practise, albeit not impossible.
Reason #3: Banning Bitcoin Is Impractical
Government prohibitions may limit something, but they cannot make something valuable and widely sought disappear by introducing laws.
Take into account the governments of Argentina, Venezuela, and a host of other nations that have policies that prevent their populations from acquiring US dollars.
The desire and ability of their population to use them, however, are largely unaffected by these regulations. Instead, these behaviours produce a thriving free market, or a better term would be a black market.
Similar to this, take into account how effective government prohibition of cannabis has been throughout time. In spite of their best attempts, marijuana has always been accessible in the most of the major cities.
It is completely unrealistic to try to impose a ban on something digital and global like Bitcoin. Governments would find it far harder to outlaw Bitcoin than US currency or a plant.
It’s already too late to outlaw Bitcoin, even if it were possible.
Large corporations, politicians, and everyday people all promote Bitcoin to a critical mass.
They might represent Bitcoin using all of their legal expertise, lobbying experience, and political connections. Such political firepower is impressive. And they are becoming more common.
A NYDIG survey found that 46 million Americans are Bitcoin owners. That represents about 22% of all US adults.
Supporting a Bitcoin prohibition would mean siding with tens of millions of Americans, many of whom are well-off, influential, and connected.
In other words, banning Bitcoin won’t help anyone win a vote.
Bitcoin has already reached escape velocity. In other words, it’s too politically mainstream to be banned, and it just gets more powerful with time.
The Bottom Line
The US government might still take into consideration the move even though outlawing Bitcoin would be politically unpopular and against the Constitution—but it can’t.
The US government will therefore need to adjust to that fact. In reality, it has already done so by providing investors and businesses with a clear regulatory framework for Bitcoin.
All of it together creates an unstoppable superior form of money that is sweeping the world.
It’s not difficult to predict where this trend will go. It’s a monetary revolution.
However, many people continue to think that Bitcoin will be banned or otherwise restricted by the government.
This perception gap is fortunate for us because it enables us to make investments that take advantage of this potent trend and profit from the information asymmetry.