bitcoin blockchain technology
Share on facebook
Share on twitter
Share on linkedin

Why Bitcoin has come to stay

Time and again we hear the assertion that Bitcoin could be banned. If and when Bitcoin becomes too big, it would threaten national currencies. Governments would then ban it by making it illegal to use Bitcoin. This assertion is made by people who no understanding of the system as a whole, let alone its finer points.

True enough, there is nothing that can actually prevent governments from banning Bitcoin. But they will not do so, because a national ban would place the country concerned at a competitive disadvantage compared to other economies where Bitcoin is not banned.

Bitcoin would only present a possible threat to a national economy if it were used for a substantial share of trade in that economy. That is particularly the case in those economies in which the population has lost faith in their own currencies. But to ban Bitcoin in such circumstances would in effect mean banning a currency which is trusted by a substantial part of the population who hold and use it. These people would continue to use Bitcoin despite the ban. They would in effect reject those actions of their government which are aimed at compelling them to switch from a sound to an unstable monetary system. This in turn would lead to consequences such as a devaluation of the national currency, limited trading opportunities and many more. Any attempt to enforce the ban is likely to prove even more catastrophic. Given that Bitcoin is pseudonymized and uncensorable, the government would have to resort to the kind of measures associated with a police state for such a ban to be effective. There are no technological means by which to prevent Bitcoin transactions without literally shutting down the Internet (and even then there are some alternative methods of using Bitcoin). Any country in such circumstances would be on the road to totalitarianism. Substantial internal unrest is likely to be unavoidable. It is therefore highly unlikely that Bitcoin would be banned.