Governments will ban it!
In 1933, the US government, in a desperate move to keep control over the currency, banned private ownership of gold.
The gold ‘ban’, known as ‘Executive Order 6102’ back then, existed for 31 years. The main rationale behind the order was actually to remove the constraint on the Federal Reserve preventing it from increasing the money supply during the depression.
A gold ban is comparatively easy to put into action due to gold’s physicality. It’s hard to transport (especially when trying to flee a government) or to protect. Your Bitcoin however, you will be able to ‘transport’ even just by memorizing a series of 12-24 words (the so-called ‘seed phrase‘) – and on top of that, to optionally protect them using a ‘password’ (a 25th word). That way, you can take your Bitcoin with you wherever you want, whenever you want – globally. No one even knows that you own any!
Even if governments were perfectly organized and aligned on a global level to ‘prohibit Bitcoin’ – one could still find markets or persons interested in exchanging them. All you need is the Internet, but on top of that, Bitcoin can even be transferred by satellite connections, through Mesh networks, mobile phone text messages and other means these days.
But what if mining were banned, wouldn’t that stop the ability to store transactions and to mine new Bitcoin? Indeed – the obstacle for such an intended ban to be successful is just that mining is also possible everywhere in the world (which is why Bitcoin’s distinctive superpower over other projects, it’s extremely high and multifaceted levels of decentralization, are so crucial). Even if China – where the world’s major mining pools are located – would ‘ban Bitcoin’: miners in other countries would be too happy to take over, and to mine these precious Bitcoin by themselves. Actually, for the decentralization of Bitcoin mining, such a ban by a major country would be very positive, it would immediately result in more balanced distribution of the Bitcoin hash rate!
When looking at such scenarios from a macro perspective, attacks by governments may very well even make Bitcoin stronger in the long run. Of course, a government that would somehow be able to attack Bitcoin with a lot of hash power, or by trying to block on-ramps and off-ramps for Fiat money (exchanges) would cause a shock in the markets and even the community at first. But immediately after that, all available brainpower in the community would flow right into how to work around the respective obstacles, and it is therefore very likely that a solution either already exists, or that one would quickly be found (unless things wouldn’t even smooth out by themselves, for example by a boost in p4p trading … we even have concrete examples for this: a ‘Bitcoin ban’ in Nigeria in 2021 resulted a) in a massive rise in price for Bitcoin, b) more distrust in Nigeria’s fiat currency, and c) an explosion in p4p trading activities even apart from the Internet, which reduced the governmental impact on Bitcoin trading compared instead of increasing it as intended).
Another, often underestimated factor, is that an increasing number of powerful people and system-critical corporations (like politicians, billionaires, major funds, banks, Tesla, Square and others, not just from Western, but also many Asian countries by the way) already have relevant stakes in Bitcoin, and they would be very unhappy if their governments would effectively destroy their investment.
For all the points mentioned above, the most frequent ‘attack’ vectors (if we want to call them that way) of most governments against Bitcoin is taxation today. Effectively, the government wants its share of your financial gains – most will ultimately accept that (considering that the price appreciation of Bitcoin more than covers the tax they’ll have to pay for it). What is a more serious but also increasingly frequent attack against some of Bitcoin’s fungibility & privacy properties are address disclosures / registrations (as always, with the excuse of having to fight ‘criminal abuse‘), also known as ‘KYC’ / ‘AML’.
All in all though, the means of governments to effectively ‘shut down’ Bitcoin for an ‘effective’ enough amount of time to ‘get rid’ of it are minuscule, but would turn out to be extremely costly in terms of money, their credibility, the images of their respective ‘main’ currencies and ultimately even result in an almost ‘untouchable’ image of Bitcoin as a monetary system. On top of that of course, a government ban would also destroy a country’s own opportunity to capitalize on Bitcoin’s success in the future, by making it harder to accumulate Bitcoin for their own treasury reserves. As long as Bitcoin never had to overcome a head-on attack by governments, at least all the carefully served media FUD and worries keep adoption and growth at reasonable levels.
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