Some experts think that decentralization is crucial if governments plan to ban Bitcoin. The authorities only put regulatory pressure on centralized platforms, which leads many users o avoid them.
Some analysts recently discussed the possibilities of countries banning cryptocurrencies like Bitcoin (BTC) and the options for citizens in that context.
Jameson Lopp, CTO of the firm Casa, pointed out the various bans governments can place. He said that countries could declare some blocking that has no application or is more or less effective.
He talked about the prohibitions aimed at cryptocurrency exchanges and other centralized service providers. He said those decrees could limit their relationship with banks or prevent their legal operation.
Loop mentioned that countries like Turkey and Nigeria had applied those measures somewhat effectively. However, he acknowledged that they do not stop Bitcoin, saying that governments are far from entirely banning it.
Canadian bitcoiner @nvk urged to assess the behavior of financial markets amid a prohibition of this nature. Other experts recalled that those extreme restrictions drive black markets and only prevent trading Bitcoin legally.
Rod Stoner, head of security from Casa, mentioned the level of adoption of Bitcoin and other cryptocurrencies, thus supporting that claim. He said that some countries like El Salvador had adopted it as legal tender while other governments were in the process of doing it.
The Limitations on Bitcoin Mining Do Not Work Either
Loop said that the restrictions on Bitcoin mining limited the hash rate on the network. However, he noted that they had not prevented it from working.
Last year, the Chinese authorities banned all Bitcoin-related activities, but the blockchain kept operating despite the considerable migration of miners. Jameson Loop considers that it proves that governments cannot stop the network, saying that their attempt to do it is unfeasible.
The CTO of Casa added that this financial network continues to operate despite the threats from governments to punish suspected Bitcoin users.
What Would Happen If Governments Banned Bitcoin Trading Globally
The above experts made those statements shortly before the invasion of Ukraine and the consequent economic sanctions on Russia. That situation has led to assume that the Eurasian country will use cryptocurrencies to circumvent those restrictions.
Many fear that the United States and the European powers would attack the cryptocurrency sector with strong bans if Russia evaded the sanctions with Bitcoin.
The governor of the European Central Bank (ECB), Christine Lagarde, had already announced that possibility. She urged legislators to approve a regulatory framework on cryptocurrencies to prevent those evasions.
The analysts said a global increase in strict measures to limit trading cryptocurrencies would fit those scenarios.
Stoner believes he would have GPG (crypto tool) encrypted copies of his private keys and keep them hidden while the legislation operates. He also highlighted the importance of preserving the privacy of personal data.
Countries with Restrictions on Trading Bitcoin Would Resort to Decentralized Tools
If there are strict regulations on trading cryptocurrencies, countries would resort to decentralized platforms like DEX and self-custody wallets, said the analysts.
James Loop highlighted that the government would first pressure centralized exchanges since they can exert most control with the least effort.
Bitcoiners refer to centralized exchanges as chokepoints they should avoid, as the authorities pressure them. In contrast, decentralized tools are beyond the regulatory machine.
By Alexander Salazar
