Go ahead, pass laws. They can’t kill bitcoin, even if they try

banks ban bitcoin credit card hong kong finance economy
Anthony WallaceAFP/Getty Images

Bitcoin is a famously dececentralized cryptocurrency, a system of storing value, and a somewhat less-effective transaction medium. It allows near-instantaneous transfers all over the world without a middle man or regulatory body giving it the go-ahead. Fans of cryptocurrency fear government regulation could ruin it, but they shouldn’t be concerned. Any attempt control bitcoin simply won’t work.

Beyond the difficulties presented by the decentralization of bitcoin itself, governments and regulatory bodies have shown they lack understanding of technological topics, and bitcoin is one of the most complex. As governments struggle to ban technologies like Tor and encryption, it seems impossible to imagine them gaining the ability to truly impact bitcoin – and its alt-coin contemporaries – in a way that could impede its progress.

Historical precedent

The oversight jitters are understandable. There have been some attempts at regulation over the years, and now that bitcoin’s value has spiked to unprecedented new heights, there is greater discussion than ever from governments around the world. Perhaps it’s no wonder that half of those surveyed in a recent report of bitcoin owners claimed they didn’t want any regulation of cryptocurrency in the coming years.

The blockchain it’s built upon does not require an institution to operate it.

In December 2013, the Chinese government banned financial institutions from using bitcoin, causing a downturn in the cryptocurrency’s value that would set a precedent for its worth over the coming years. Less than a year later, in April 2014, several Chinese bitcoin exchanges had their bank accounts closed. That spurred concern that government oversight limiting access to fiat currency (traditional, ‘real world’ currency) could be lead a wave of future regulations to curtail bitcoin’s growth. Yet loopholes in the crackdown meant many exchanges stayed in business, and bitcoin’s price rose some 25 percent in the 10 days that followed.

The U.S. has made localized attempts to regulate specific aspects of bitcoin. New York State requires a “BitLicense” for bitcoin related businesses, with specific rules for employee vetting and identification. Just last month, the IRS won a landmark ruling to gain access to information about 14,000 historic Coinbase accounts, in an attempt to gather back taxes from owners.

While some of those instances are more concerning than others, none of it has stopped bitcoin’s growth. That reveals the flaws of any future attempts to crack down on bitcoin’s use.

Bitcoin’s intrinsic impossible oversight

There are several key components to bitcoin, and its fellow cryptocurrencies, which make them successful as methods of transaction, and stores of value. They’re easy to transfer, no middle-man is required, and they can’t be linked to owners who don’t want to be identified. These are all big problems for any government wanting to have a greater say in how they operate.

Bitcoin is not linked to any territory or financial institution. There are tens of popular exchanges, and even if there weren’t, all you need are wallets and a network connection to be able to conduct bitcoin transactions. The blockchain it’s built upon does not require any one institution to operate it, and indeed is the complete antithesis of such an idea, operating as a public ledger rather than a private one.

Without that central location to shut down, any meaningful crackdown would have to be a global endeavor. Even if a country was to somehow prevent bitcoin transactions from taking place within their borders, a simple VPN or Proxy system would let users operate internationally with little issue.

If governments could effectively stop a peer to peer network, they would’ve shut down the illegal practices of torrent websites over a decade ago. Even the success of the hydra-like torrent sites isn’t a perfect analogy for bitcoin, though, because cryptocurreny’s legal status is far easy to debate.

A fairer comparison would be the so-called dark web. Although individual sites, servers and people involved with various activities on there may occasionally be arrested for illegal activities, it would be ridiculous to think any government could regulate the entire network. Trying to ban bitcoin or regulate it in a manner that allows actual oversight would be much the same. It’s impossible on a technical level.

Even tracking individual people who own specific wallets is difficult. While the public blockchain might allow governments or law enforcement to track down certain bitcoins, tying them to a real-world person is very difficult. An owner can hide his or her identity with a VPN, Tor, or even physically move a wallet into cold storage (offline) form, making it invisible to the world.

Is there any wonder that bitcoin is being used for money laundering, ransomware and other organized crime tactics? Take the additional step to throw your bitcoins through a tumbler that jumbles up your bitcoins with many others, and then spits them out into another wallet not linked with the original, and the trail quickly goes cold.

The caveats

The most serious impact regulation could have on bitcoin, is in limiting the ability to “cash out,” converting the cryptocurrency into more traditional, fiet currencies like U.S. Dollars. Making that difficult could cause problems in the short term, though it would need to be a strategy that was enacted all over the world. Almost all global currencies can be traded online without difficulty, so if even one territory still facilitated a trade in cryptocurrency into local denominations, those could then be traded for and cashed out in turn.

If Bitcoin itself was regulated against, then users could simply trade it for another currency.

If bitcoin itself was regulated against, users could simply trade it for another cryptocurrency, and then cash that one out instead. With hundreds of cryptocurrencies now in existence and more emerging all the time, it would be nigh on impossible to stop unless all currencies were barred.

As regulation in other industries has shown, sweeping legislation is incredibly complicated to implement and even more difficult to enforce.

The effectiveness of any such regulation also assumes the need to cash out. Many people see cryptocurrencies like bitcoin as an evolution of existing currency. If we were to reach a point where bitcoin could purchase services and goods of all sorts, why would you need to cash out at all?

If that seems farfetched, just consider the fact that hard cash is uncommon in many countries. Digital transactions online and in person preclude the typical need for real-world money. Cryptocurrencies could be the next part of that evolution.

If you can’t beat’em

Ultimately, the best response to bitcoin is not to limit it, but to embrace the technology and try and work with it.

It certainly won’t be easy, as bitcoin doesn’t operate in a manner that makes integrating it with existing financial models easy. As we discussed in a recent piece on Digital Trends, it’s more like a new version of gold than it is Paypal. Yet it could be both, at some point in the future.

Governments like Japan, which now grants bitcoin legal tender status, or Saudi Arabia, which is working on its own cross-border cryptocurrencies, clearly see the writing on the wall. Bitcoin and its contemporaries are not going anywhere, and any attempt to stop them would be futile.

Helping to create the future of cryptocurrencies with the users and developers would be a much smarter and more effective stance for governments and regulatory bodies to take. Here’s hoping they do.

Emerging Tech

Awesome Tech You Can’t Buy Yet: 1-handed drone control, a pot that stirs itself

Check out our roundup of the best new crowdfunding projects and product announcements that hit the web this week. You may not be able to buy this stuff yet, but it sure is fun to gawk!
Computing

Four fake cryptocurrency apps were listed on the Google Play Store

It is a dangerous time to be going after crytocurrency on Android. Four bogus cryptocurrency apps were spotted on the Google Play Store this week, according to a report from cybersecurity researcher Lukas Stefanko. 
Gaming

These are the best Xbox One games available right now

More than four years into its life span, Microsoft's latest console is finally coming into its own. From 'Cuphead' to 'Halo 5,' the best Xbox One games offer something for everyone.
Gaming

The best free-to-play games you can play right now

Believe it or not, free-to-play games have evolved into engaging, enjoyable experiences. Here are a few of our favorites that you can play right now, including Warframe and the perennially-popular League of Legends.
Computing

Razer’s BlackWidow Lite is a mechanical keyboard designed for work and play

Razer's latest keyboard comes with a minimalist design that will appeal to professionals. But don't let the all-black aesthetics fool you, as the BlackWidow Lite comes with mechanical keys that makes it a great gaming companion.
Computing

Microsoft’s Always-Connected PCs gets more powerful with 64-bit app support

Microsoft announced that developers can start creating 64-bit apps for Always-Connected PCs powered by Snapdragon processors. The Windows Store will also begin to accept 64-bit app submissions for Microsoft's Windows on ARM.
Computing

Nvidia admits its 2080 Ti cards have a problem, but isn’t saying what it is

Nvidia has admitted that there is a wider problem affecting its RTX 2080 Ti Founders Edition cards, despite earlier claims to the contrary. It has also promised to continue working with affected consumers to replace dead cards.
Computing

The MacBook is smaller, the MacBook Air is faster, but which is better?

This year, Apple's MacBook Air got a powerful internal upgrade, but the redesign makes it slimmer and lighter. So should you get the MacBook Air over the MacBook? We'll compare both notebook's major features and help you decide.
Deals

The Best Black Friday Deals from Best Buy in 2018

We've been hard at work assembling all the best Black Friday deals Best Buy offers in 2018 and putting them in one place to save you time and money this holiday season. From laptops to TVs, game consoles to smart speakers and much more…
Computing

HDR monitors are beginning to have an impact. Here are the best you can buy

HDR isn't the most common of PC monitor features and is often charged at a premium, but the list of available options is growing. These are the best HDR monitors you can buy right now.
Computing

Windows Update not working after October 2018 patch? Here’s how to fix it

Windows update not working? It's a more common problem than you might think. Fortunately, there are a few steps you can take to troubleshoot it and in this guide we'll break them down for you, step by step.
Computing

Microsoft Surface Pro 6: Everything you need to know

The Surface Pro 6 is officially here, though it's not as big of a redesign as you might have hoped. With a new coat of black paint and an 8th-gen processor, this is a small update. If you've been eyeing a Surface Pro, you may want to wait…
Computing

Turn your iPad into a display for your new Mac Mini with this workaround

The folks at Luna Display have figured out a workaround which lets you get the best of both worlds and use Wi-Fi and an adapter in order to turn your iPad into a display for the 2018 Mac Mini.
Deals

Black Friday 2018: The best deals so far

Black Friday is the biggest shopping holiday of the year, and it will be here before you know it. If you can't wait until November 23 to start formulating a shopping plan, we've got you covered.