The Casa company, dedicated to developing Bitcoin security software, organized a discussion panel a few days ago. There, the real possibilities of countries banning cryptocurrencies such as bitcoin (BTC), and the options that citizens have in a similar scenario were discussed.
In the discussion, which was developed live Jameson Lopp, CTO of the firm, participated in a Twitter space, along with Ron Stoner, head of Security at the firm. Also present were the Canadian bitcoiner identified on Twitter as @NVK; and Dave Bradley, founder of Bitcoin Brains.
Can a nation really ban Bitcoin? This was the initial question that was thrown at the panel. Jameson Loop was the first to respond, stating the different types of banning (or blocking) that governments can implement.
“When we are talking about bans, there are some levels of blocking that could be declared in a country. Several of them have no application, while others have been more or less effective », he observes.
He thus speaks of the prohibitions that are directed at the operation of exchanges or centralized service providers, which can limit their relationship with banks or also prevent their legal operation in a country.
These types of decrees have been applied in countries such as Turkey and Nigeria. It is a measure that has a certain degree of effectiveness, Loop acknowledged, but it doesn’t stop Bitcoin. An idea that Bradley supported indicating that, in his opinion, we are a long way from governments having the ability to aggressively ban Bitcoin completely.
When talking about this topic, @nvk calls to evaluate the behavior of the financial markets when a prohibition of this nature is reported. Panel participants recall that these types of extreme prohibitions are those that promote black marketsand therefore they only prevent the legal trade of the cryptocurrency, they do not eliminate it.
Rod Stoner supports this claim, citing the level of adoption bitcoin and cryptocurrencies have reached today. Some countries (such as El Salvador) adopt it as currency, while other governments are legalizing them. “This brings things to the point where we can say it doesn’t matter anymore if some country bans it because it’s now a global tool.”
Mining limitations don’t work either
“We can go further and talk about restrictions on Bitcoin miners with a view to limiting processing power or hash rate,” Loop chimes in.
In this case, the miners are denied to operate the equipment in the country, but that does not prevent the network from continuing to function.
This was what happened in China last year, and we saw that the Bitcoin blockchain did not stop despite the massive migration of miners. This shows that for governments to stop the network is impossible and therefore “the attempt to stop Bitcoin as a protocol is unfeasible,” insists Jameson.
This is a financial network that blatantly continues to operate despite proclamations from governments that they are going to send law enforcement and the military to the home of every suspected Bitcoin user.
Jameson Loop
What would happen in the event of a global ban on bitcoin trading
The above statements were made shortly before the invasion of Ukraine took place, with the consequent economic sanctions imposed on Russia. A fact that has led many to suppose that the Eurasian giant will use cryptocurrencies as a means of evasion.
Regardless of whether or not this becomes a reality, it is feared that if Russia evades sanctions with bitcoin, the United States and the powers of Europe would lash out at the cryptocurrency sector with strong bans.
In fact, this possibility was already announced by the president of the European Central Bank (ECB), Christine Lagarde, who a few days ago urged lawmakers to approve a regulatory framework on cryptocurrencies, to avoid these evasions.
Precisely, an increase in strict measures at a global level to limit trade with cryptocurrencies fits into one of the scenarios that was contemplated, hypothetically, in the Casa forum.
“I think I would immediately make sure that I have encrypted copies in GPG (encryption tool) of my private keys or my seeds, and I would keep it somewhere hidden and just stay quiet while the legislation operates,” Stoner said. He also highlighted the importance of preserve the privacy of personal data.
However, the possibility of a strict ban was also discussed with new bitcoiners in mind, or those who care excessively about legal issues.
They were told about the use of decentralized and open source tools, whose operation contrasts with that of centralized platforms, more exposed to the regulatory hand of the authorities.
Resorting to decentralized tools to circumvent bans
In the supposed case of strict regulations or strong limitations for the trading of bitcoin and other cryptocurrencies in a country, the logical step is use decentralized platforms (DEX and self-custody wallets), pointed out the members of Casa.
We know that that (on centralized exchanges) is where the government pressure is going to end, because any authority is going to try to exert the maximum amount of control they can with the least amount of effort.
Jameson Loop
CEX or centralized exchanges are pointed out by bitcoiners as chokepoints that should be avoided, because «in them is where the pressure is put«.
Decentralized tools, by contrast, are far from the regulatory machine. As an example It’s worth what happened in Canada during the recent trucker proteststo those who could not block the donations given through this type of platform, as reported by CriptoNoticias.