“You must turn off the Internet. Hester Pierce, commissioner of the US Securities and Exchange Commission (SEC) On the implementation of the Bitcoin ban.
Although the market value of Bitcoin has crossed $1 trillion, data from government authorities and business leaders continue to fuel speculation about a US ban on Bitcoin. US Treasury Secretary Janet Yellen, in public Criticize Bitcoin and other cryptocurrencies for their role in “illicit finance.” In the private sector, Ray Dalio, founder of the world’s largest hedge fund, owns hung Bitcoin may be banned just as gold was in the 1930s. Jesse Powell, CEO of Kraken, a US-based cryptocurrency exchange, also has… warned That there may be some crackdown on digital assets.
Could the US carry out such a “campaign” by joining countries like India, Nigeria and Turkey in implementing a ban on Bitcoin? While a complete ban is certainly possible, the practical, legal, economic, and political difficulties of implementing such a ban make it unlikely. Instead, we can expect the US to join other advanced economies in further regulating bitcoin. Regulators will face the challenge of writing laws that can be enforced without stifling the new opportunities for economic growth that Bitcoin offers to those countries that adopt it.
A basic understanding of blockchain technology underlines the practical challenges of banning Bitcoin.
“Blockchain” describes a decentralized and distributed ledger that records the histories and transactions of digital assets. Bitcoin is a virtual asset that is accessed and registered on such a blockchain.
The term “cryptocurrency” is somewhat of a misnomer because Bitcoin is more like a decentralized network than a traditional currency that can be held or confiscated from a regulated trustee. Instead of holding physical “coins” or accessing an “account” with a regulated third party, a bitcoin holder uses private keys to unlock digital assets registered on a blockchain held by a decentralized, global network of computers. These private keys are often represented in a series of words, known as a “recovery phrase,” which can be saved and used to access bitcoin anywhere in the world with an internet connection. Thus, Bitcoin cannot be confiscated more than memories.
While the United States could criminalize bitcoin ownership, it would be impossible to enforce such a ban. Specifically, there will be no way for the government to expropriate bitcoin from its global decentralized network. The government will not be able to extract redemption phrases saved by cardholders who refuse to share them or claim they are lost or stolen. Moreover, bans in other countries show that such a move may backfire. For example, when a file central bank From Nigeria, local financial institutions serving cryptocurrency companies, buyers and sellers are starting to use peer-to-peer trading platforms to trade bitcoin at a price excellent in that country.
The political rhetoric that has been part of the Bitcoin network from the start and the inherently interconnected nature of the Bitcoin network would also make any ban on this asset vulnerable to strong First Amendment challenges.
Bitcoin was created as a public network where participants make immutable entries on an electronic ledger. While the most obvious manifestation of these entries is an exchange of value, bitcoin is more than just cash. According to a famous Bitcoin lawyer Andreas Antonopoulos“Saying that Bitcoin is digital money is like saying that the Internet is a luxury phone. It is like saying that the Internet is all about email. Money is only the number one app.”
In fact, the Bitcoin network has been used for political discourse since its inception. The first “configuration” block (or transaction recording) on the Bitcoin blockchain contained the following statement: “The Times 03/Jan/2009 Chancellor is on the brink of a second bank bailout.” On the day of the Nasdaq IPO, Coinbase had a mining pool that included the following address In the Bitcoin blockchain, “NYTimes 10/Mar/21 House Gives Final Approval to Biden’s $1.9T Pandemic Relief Bill.” These messages, which are a commentary on the role of central banks and government authorities, cannot be monitored and can be read by anyone with an internet connection. Unlike the occasional handwriting written on a perishable paper dollar, political statements have been permanently and irreversibly etched into the Bitcoin blockchain from its inception and throughout key moments in its history.
The political rhetoric that Bitcoin has expressed since its founding as a networked association outside the purview of any central authorities’ attempt to ban must be subject to the most stringent scrutiny. Since the First Amendment has been widely applied to emerging new technologies, it would be reasonable to expect a similarly broad application of the blockchain technology itself. A particularly detailed discussion can be found on why bitcoin is talk Here.
Opponents of banning Bitcoin in the US will also have arguments about due process under the Fourth, Fifth, and Fourteenth Amendments to the US Constitution. The IRS classifies bitcoin as proprietary and therefore any ban may constitute an unconstitutional expropriation. Bitcoin itself has been confiscated and sold by the US government, further legitimizing its status as a protected property under the Constitution. While the government could counter this argument by giving holders a window to convert their bitcoins into US dollars, the potential loss of hundreds of billions of net worth to publicly traded individuals and companies would not result in the “fair compensation” guaranteed by the constitution.
Even if the US government could legally ban Bitcoin, doing so would be economically prohibited.
Much of the value of bitcoin is created and held by US companies. For example, Tesla bought $1.5 billion in BitcoinCoinbase is a publicly traded cryptocurrency exchange based in the United States with a Market value of more than 85 billion dollars, and mainstream banks such as JP Morgan Chase and Goldman Sachs Launches investment products for cryptocurrency. Moreover, the payment companies such as Visa And the PayPal It helps thousands of small businesses accept bitcoin for goods and services. Although opponents may echo claims that bitcoin is used by terrorists and drug dealers, blockchain analysis indicates that only a small and diminished portion of bitcoin transactions are used for nefarious purposes.
Bitcoin’s many applications of storing value, authenticating, and sharing intellectual property promise to create as many new businesses as the Internet did in the late 1990s and early 2000s. Any ban or crushing regulation by the US government would miss an opportunity to remain a world leader in new technologies.
Just as Bitcoin has grown exponentially, so has its political influence. It is likely that this effect, combined with practical, legal and economic factors, will lead the US government to create regulatory certainty rather than impose an outright ban on Bitcoin.
Companies and individuals with significant exposure already have significant political influence. to me quindiskSam Bankman-Fried, CEO of crypto derivatives platform FTX, made the second largest donation to Joe Biden’s presidential campaign. Recently, Fidelity Investments, Square and Coinbase They joined forces to launch a Bitcoin trading group to put pressure on policy makers.
As the number of Bitcoin users continues to grow rapidly, any attempt to ban will be met with not only resistance to corporate pressure but also the anger of the growing and enthusiastic mass of the voting public. In fact, Coinbase, the largest US-based cryptocurrency exchange, Reported Nearly 56 million verified users in 2021, up from 35 million in 2020. One of the founders of Coinbase Fred Ehrsam tweeted that 10% of people now own cryptocurrency in the US. While the accuracy of this claim may be debatable, there is no dispute that this rapidly growing group would apply significant political pressure in response to any proposed ban.
Until there is greater regulatory clarity regarding Bitcoin, statements by some prominent government figures and business leaders will continue to fuel speculation about the imminent demise of this emerging asset. Although a complete ban would not be practical for the above reasons, further regulation can be expected. If this regulation is narrowly designed to avoid strangling the emerging Bitcoin economy, it could bring new legitimacy to the digital asset, reduce its use for illicit purposes, and bring additional price stability.
This is a guest post by Stuart Russell. The opinions expressed are their own and do not necessarily reflect the opinions of BTC, Inc. or Bitcoin Magazine.