Never a boring day in the crypto world!
Last night, another controversial news shook the space and opened the debate around the possibility of banning purchases of cryptocurrencies for Americans.
US Congressman Brad Sherman, talking to a meeting of the House Financial Services Committee, called for a bill that would outlaw or ban cryptocurrencies.
In a statement, he said the ban is necessary because cryptocurrencies threaten to undermine the U.S. dollar and are only useful for criminal activities like money-laundering, drug-dealing, and tax evasion
For the record, this is not the first time that Rep. Sherman has expressed his hostile views on the matter. In March 2018 he called cryptocurrencies “a crock” and in July of the same year, he declared that the US should prohibit American citizens from buying or mining cryptocurrencies.
Moreover, his remarks follow the words of another fierce opponent of Bitcoin, Joseph Stiglitz, a Nobel-Prize winning economist. Earlier this week, Stiglitz said that cryptocurrencies should be shut down, “because the anonymity and lack of transparency could give malicious actors new ways to perform illegal activities.”
“We have a very good currency [the US dollar], so far the currency has been run in a very stable way. We talk about the attributes of a good currency, and the US dollar has them whereas cryptocurrencies do not. I actually think we should shut down the cryptocurrencies,” Stiglitz concludes.
The list of crypto-bashing economists, politicians, and investors like Warren Buffet could go on and on and every now and then we hear them raising their voices against the new monetary system.
This time though, the US Congressman goes beyond the usual rant and asks for a clear ban on cryptocurrencies. The main issue according to him is the possibility of disempowering the importance of the dollar on the global economy.
He asserted that this has always been one of the main reasons crypto enthusiasts want decentralized digital currencies to succeed: weaken the economic power of the US dollar and offer the chance of one single global currency to defeat censorship and remove the relevance of US sanctions on some “rogue” countries like Iran.
In light of this recurrent demand for a ban, there’s one question we would like to try and answer right now, which I believe is of most importance in the whole spectrum:
Can cryptocurrencies be banned and how?
The simple answer is NO they can’t be banned.
One of the main features of decentralized digital currencies like Bitcoin is its censorship resistance. How does that work? With cryptography, that allows encryption (text protection) and decryption (back to a readable text) of messages with total anonymity.
Cryptocurrencies like Bitcoin cannot be banned because they depend on cryptographic algorithms and not on a central authority that can be tracked and shut down at pleasure.
A visit to the Bitcoin whitepaper will remind you that the whole point of creating the payment tool is to resist the censorship of governments and powerful entities like banks and financial institutes through technology.
The decentralized nature of blockchain makes cryptocurrencies theoretically immune to the old ways of government control and interference, therefore, a practical and effective ban on cryptocurrencies is by all means extremely hard to enforce.
At this point, I said “hard to enforce” and no more “impossible.”
This is because from a technical perspective the ban is impossible even though a government can surely damage the economy that surrounds the crypto space, and stunt its growth momentarily.
How can they be banned then?
With the economy working with production and consumption of goods, services, and the supply of money, a government can crack down on all parties involved by criminalizing any of their activities involved in cryptocurrency commerce.
In bitcoin land, the key players in such trading environment are exchangers, miners, sellers, and consumers.
Governments couldn’t completely ban everyone from using bitcoin, but they could certainly make it practically impossible to use bitcoin in a given area by taking severe measures against it and its players.
The good news is that globally, there are enough states trying to reduce their dependence on the dollar that would surely welcome miners, exchanges and any other crypto related activity if they could affect the hegemony of the US in any way.