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Why a longer-term ban seems almost impossible!
As we have seen in the past,
almost every major innovation has resulted in bans and regulations.
Why do governments really want to ban cryptos?
And why it is almost impossible.
Yesterday I took a profit from Gamestop because Gamesop rose again to over $ 180 and as expected, gamestop is already falling a little today, so that was a good decision.
We are currently invested in Gamestop Corp. with 2.3%.
We reinvested in cryptocurrencies today. - Among other indicators, the RSI indicates oversold.
And keep in mind that we will keep cryptocurrencies for the long term
Why a longer-term ban seems almost impossible
As we have seen in the past, almost every major innovation has resulted in bans and regulations.
We think about Uber. It shook up the whole taxi industry. UBER began to be banned immediately, but later it was allowed and regulated again, where today some of them exist alongside taxis.
Why do governments want to ban cryptos?
Cryptocurrencies are decentralized and limited money that exists as a parallel currency alongside state money over which the state has no power to act.
That is why it has the potential to turn our entire financial world upside down because it makes managing the economy and the state budget extremely difficult.
Central banks and governments would lose their monetary power and would have less control over the respective people.
To prevent this, the state will try to gain control over this parallel currency through regulation.
With what justification do governments ban cryptocurrencies?
Most governments justify their bans with consumer and environmental protection.
In fact, mining consumes a lot of electricity. However, cryptocurrencies are always evolving.
The developers of the crypto currency Ethereum announced the change of the blockchain from Proof of Work to Proof of Stake, which only consumes a fraction of the energy.
The extremely energy-intensive days of the currency are over.
You will soon find out about the technical background of this new blockchain here soon.
Probably the real reason is therefore to prevent capital flight from fiat currencies into cryptocurrency.
For this reason alone, the state measure cannot be legally justified sufficiently.
Because a legal ban in a constitutional state has to withstand many hurdles.
A regulation or a ban is a state intervention in private action.
In accordance with our rule of law principles, these state measures must 1. be in the public interest
Be proportionate
must be suitable to achieve the regulatory objective and
fulfill a protective purpose.
Obviously, it is very difficult to argue to ban an innovation that makes the population more independent and free in action and even drives the economy forward - think of smart contracts (ETHEREUM) or the Internet of Things (IOTA), for example.
Where the "possession and trading" of cryptocurrencies is currently prohibited:
Afghanistan, Pakistan, Algeria, Bolivia, Bangladesh, The Republic of Macedonia, Saudi Arabia, Vanuatu and Vietnam
Where "trading" in cryptocurrencies is prohibited:
China, India, Ecuador, Indonesia, Morocco, Zambia, Nepal, Egypt, American Samoa, Qatar and Turkey.
In around 111 countries, cryptocurrencies are legally recognized and legal.
Countries where cryptocurrencies are neither legal nor illegal:
Albania, Andorra, Argentina, Barbados, Colombia, French Guiana, Gabon, Jamaica, Jordan, Kazakhstan, Kenya, Kosovo, Kyrgyzstan, Malaysia, The Maldives, Mauritius, Nigeria, Panama, Paraguay, Peru, Tunisia, The United Arab Emirates, Tanzania and Uruguay
What I think is likely to happen in the short term:
The power of cryptocurrencies is going too fast for governments.
With every day that goes by without crypto regulation, the states will lose a bit of autonomy over their monetary system.
Regulation of cryptocurrencies will most likely take place soon.
For countries that follow the rule of law, I consider bid regulations to be the most likely.
These are likely to be used for cryptocurrencies that are used as a means of payment.
Consumer and money laundering protection are likely to serve as regulatory purposes.
Apart from clearly defined individual measures, trade bans will remain the exception! Legal arguments would be too shaky here.
Maximum for completely anonymous currencies such as Monero.
A possession ban is almost completely excluded!
I would like to add that a regulatory solution has a great economic advantage and the crypto scene will respond positively to regulation.
Crypto and blockchain companies want regulation in order to finally have legal certainty, as the past shows.
Long-term view - why cryptocurrencies are not banned in the long term:
Reason 1: No central point of attack
Cryptos are an independent protocol, similar to the Internet.
It is an open source network that gives everyone the opportunity to participate or use it.
It is practically a loner and there is no one who can be held responsible for it.
We simply don't have an “off” button for this.
It's like trying to ban all of the internet from the world. Not only does it sound difficult, it is almost impossible.
Reason 2: Bans often have the opposite effect.
In fact, there used to be suggestions and even attempts to stop the Internet. In the end, these attempts all failed miserably and the decision was made not to fight them, but to do everything possible to maintain a certain control.
In addition, bans often lead to the exact opposite and attract even more attention, regardless of the fact that bans rarely achieve their goal in the digital world.
So we can imagine that a crypto ban would meet with resistance from the population.
But they could forbid mining - Whats then?
Yes, companies that operate mining could be banned in the country in which they are based.
However, their elimination would be able to be compensated by the remaining mining players at other locations and would have little impact (in the long term) on the continued existence of the blockchain.
But realistically, such a cross-border ban would set cryptocurrencies back for years and slow down adaptation, but people will always find opportunities, e.g. to gain access to it via VPN server etc. and to do so to protect your money from your own currency. Even under these tough measures, cryptocurrencies would not disappear.
Reason 3: Risk of hyperinflation
People would certainly be wondering why a government would want to ban a free network. One would quickly realize that central banks in particular, which can create unlimited amounts of money from nothing at any time, have something against cryptos.
It can be assumed that this could make many people think about our current monetary system and maybe even cause a revolution.
Henry Ford said it similarly:
"If people understood the banking and monetary system, we would have a revolution before tomorrow morning."
We can already see in countries like Venezuela and Lebanon, where their own currency has been subject to strong hyperinflation for years, that the crypto bans and restrictions are not taking effect.
These people have nothing to lose and are looking for ways out of the devaluation - one of them is cryptocurrencies. There are even clear graphics that despite bans, people are exchanging their salaries for cryptos as quickly as possible.
Click here for the report with a graphic on crypto use in countries with a crypto ban.
Record amounts of cryptocurrencies have been traded in these countries in recent years and it does not look like this trend will decrease in the next few years. The inflation in the home country is too high.
Reason 4: Cryptocurrencies are already too deeply anchored in the economy
There are now many companies that create jobs and stimulate the economy. Some of them are already on the stock exchange (COIN) or RIOT blockchain. Undoing all of that is. Not at 0 but very unlikely.
In the meantime, a huge ecosystem has established itself around the Bitcoin. Bitcoin has developed into an asset that is now increasingly in demand by companies and other institutional investors. Even the notoriously cautious pension funds invest in cryptocurrencies.
Reason 5: Technological progress would be slowed down
The government would have to manage the fine line to ban certain crypto currencies without banning the entire blockchain technology. That seems very difficult to me. The governments would have to make it publicly clear to the people that one would rather forego progress because one does not want to give up the money monol.
Countries would be missing out on a great opportunity for technology development, including significant tax and mining revenue losses. In addition, the country would lose innovators, entrepreneurs, programmers, lawyers, etc. who work in this sector. These people would switch to countries that offer better conditions. There are already a lot of jobs attached to it.
Conclusion:
In my opinion, governments that ban crypto currencies only react so strictly because they do not yet understand the technology and would rather ban it before it is too late and they can no longer gain control over it.
However, the network of most cryptos is only pseudo-anonymous and is completely transparent to everyone. Every single transaction can be tracked forever in the blockchain. This is exactly what gives many states the transparency they need to stop taking action against most cryptos.
The situation is different with completely anonymous cryptocurrencies like Monero. The first regulatory restrictions are already in place here.
With BTC, for example, states have the opportunity to observe and analyze the blockchain and thus track all payments. In fact, it's a lot easier than tracking cash flows. It is easier to control something than to forbid it and according to this one will try to regulate cryptos and bring them under control but not to ban them.
The crypto course would definitely react negatively to such news.
...The only question is for how long.
