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There is a saying that Bitcoin cannot be shut down. But this misses the point.
First, let me be clear that this mantra is true, at least technically. Bitcoin never shuts down because it lives on the internet. Unless, of course, you somehow shut down the internet. But for all intents and purposes, Bitcoin is decentralized and exists in the online world. This is a feat of technology with resilience to restraint.
However, while shutting down the blockchain directly is not possible, governments, at least in theory, could do a huge blow to Bitcoin and curb its adoption by the masses. It’s possible that technically it won’t result in a shutdown, and I’m not commenting on the likelihood of this happening, but if enough effort is made, an attack on Bitcoin by lawmakers could be devastating. There is no doubt that it is possible.
It suffices to note the prevalence of centralized entities in this area. Bitcoin itself is decentralized, but in order for the masses to access it, the majority goes through centralized companies like Binance and other exchanges.And what if the government goes after these companies? Is not it?
These companies are forced to comply with the law. Indeed, decentralized exchanges (DEXs) will remain and, like Bitcoin itself, be resilient to direct closures. But if DEXs were the only option, can we expect Bitcoin to achieve mainstream success and continue to grow into a legitimate financial asset?
Institutions are not only reluctant to pursue this route, but may be banned from holding it.
I am writing this article following the story that has surfaced regarding US Banking Commission Chairman Sherrod Brown’s proposal to ban cryptocurrencies.
Mr Brown said:
I have already gone to the Treasury Department and the Secretary to seek government-wide assessments through various regulatory bodies. I have.”
Although ridiculed by some, it is worth paying attention to. The United States is the financial capital of the world. If the SEC comes out and bans it, this will have seismic repercussions.
Think of the parts of the market that could be banned from holding bitcoin, such as institutions, pension funds, and publicly traded companies. Or think of all infrastructure that will be demolished, such as exchanges.
On the contrary, it remains unlikely. And going back to my earlier argument about how people overlook the possibility of a government shutting down bitcoin, Brown admitted:I would like it to do what it needs to do at the same time, I could forbid it, but it could spill offshore, and who knows how that would work. “
I am not predicting the end of Bitcoin or cryptocurrencies for this reason. I think too many people are overlooking just how much damage governments can do to the world’s largest cryptocurrency.
Indeed, the beauty of blockchain is that it cannot be shut down directly. But indirectly? That’s another story. Governments have too much power to dismiss bitcoin as irrelevant.
So far, it is inconceivable that a country such as the United States would make such a drastic move to ban cryptocurrencies. But after his ferocious 2022, where scandal after scandal rocks space, comments like Sherrod Brown shouldn’t come as a surprise.
If those words have little chance of being put into action, it would be silly for investors to dismiss it as a harmless development of cryptocurrencies.
