- With the government planning to ban Bitcoin, decentralization is key.
- Regulatory pressure will only affect the centralized platforms in the ecosystem.
A few days ago, Casa, a company dedicated to the development of Bitcoin security software, organized a discussion group. There, the real possibility of a state ban on cryptocurrencies such as Bitcoin (BTC) was discussed, as well as the options for citizens in similar situations.
Jameson Lopp, the company's chief technology officer, joined Ron Stoner, the company's head of security, for the debate, which took place live in the Twitter space. Canadian bitcoiners, identified on Twitter as @NVK, were also present; and Dave Bradley, founder of Bitcoin Brain.
Can a country really ban Bitcoin? That was the initial question posed to the panel. Jameson Loop was the first to respond, pointing out the different types of bans (or prohibitions) that governments can impose.
"When we talk about bans, a country can declare a certain level of embargo. Some of them are not applied, while others are more or less effective", he observed.
Therefore, he talked about bans against the operation of exchanges or centralized service providers, which may limit their relationship with banks and may prevent them from operating legally in a country.
These types of decrees have been implemented in countries such as Turkey and Nigeria. Loop acknowledges that this is a measure with some validity, but it does not stop Bitcoin.
Turkish President Erdogan declared war on Bitcoin and pushed for the creation of a digital lira. Source: Euronews/youtube.com
In talking about this topic, @nvk calls for assessing the behavior of financial markets when reporting on bans of this nature. One idea Bradley supports suggests that, in his view, we are still far from a complete ban on bitcoin.
Panelists recalled that it was these extreme bans that drove the black market.
Rod Stoner supports this claim on the grounds that Bitcoin and cryptocurrencies have reached the level of adoption they have today. Some countries (such as El Salvador) have adopted it as a currency, while other governments are legalizing it. "This allows us to say that it no longer matters if a particular country bans it, because it is now a global instrument."
Mining restrictions don't work either
"We could go a step further and discuss restrictions on bitcoin miners to limit processing power or hash rates," Loop interjected.
In this case, miners are denied access to operate equipment in the country, but this does not prevent the network from continuing to operate.
That's what happened in China last year, where we saw that the Bitcoin blockchain didn't stop despite the mass migration of miners. This shows that it's impossible for the government to stop the network, so "it's not feasible to try to stop Bitcoin as a protocol," Jameson insisted.
This is a financial network that brazenly continues to operate despite the government’s announcement that they will send law enforcement and military to the homes of every suspected bitcoin user.Jameson Ring
What would happen if Bitcoin trading was banned globally
The above statement was made shortly before the invasion of Ukraine, which was followed by the imposition of economic sanctions against Russia. This fact has led many to believe that the Eurasian giant will use cryptocurrencies as a means of escape.
Whether this becomes a reality or not, there are fears that the U.S. and European powers will clamp down on the cryptocurrency space if Russia escapes sanctions on bitcoin.
Indeed, this possibility has been announced by Christine Lagarde, the president of the European Central Bank (ECB), who urged lawmakers a few days ago to approve a regulatory framework for cryptocurrencies to prevent these evasions.
To be precise, adding strict measures to restrict transactions with cryptocurrencies on a global scale fits one of the scenarios assumed by the Casa Forum.
"I think I would immediately make sure I have a copy of the GPG (cryptocurrency tool) cryptocurrency my private key or my seed and hide it somewhere and keep it quiet while the legislation is running," Stoner said. He also stressed the importance of protecting the privacy of personal data.
However, the possibility of a strict ban has also been discussed with new bitcoin holders or those overly concerned about legal issues.
They are told to use decentralized and open source tools whose operations, in contrast to those of centralized platforms, are more susceptible to government regulation.
Canadians and people from around the world joined the Freedom Convoy truckers at the march and donated bitcoins to them. Source: TheLiberal.ie / twitter.com Bypassing the ban using decentralized tools
Casa Forum members point out that if a country has strict regulations or tight restrictions on the trading of Bitcoin and other cryptocurrencies, the logical step is to resort to decentralized platforms (DEX and self-hosted wallets).
We know this (in centralized exchanges) is where government pressure will end, because any authority will try to exert maximum control with minimum effort.Jameson Ring
CEX or centralized exchanges are cited by bitcoin experts as choke points to avoid because "they are where the pressure is applied".
In contrast, decentralized tools are a far cry from the regulatory machine. An example of this is the recent protests in Canada by truckers who were unable to block donations offered through such platforms, according to CriptoNoticias.