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Is Bitcoin your thing? It is mine. How secure from government intervention is it? Read this cool Quilette article ...



Can Governments Stop Bitcoin?

 

Since its creation more than 12 years ago, Bitcoin is undefeated. Its price has leaped from $0.5 to $5 to $50 to $500 to $5,000 to now past $50,000. The number of global users has eclipsed 100 million. The system’s network security, number of developers, and new applications are at all-time highs. Dozens of companies including Tesla and Square have started to add Bitcoin to their corporate treasuries.

 

Governments retain their power in part by issuing and controlling money. Bitcoin is a new model that mints and secures money without governments. So the big question is: Why haven’t governments or megacorps stopped it? And if they try to attack Bitcoin in the near future, what would that look like?

 

There is an enormous amount of speculation on the Internet about how Bitcoin might be attacked, but few stop to think about why it hasn’t already been destroyed. The answer is that there are political and economic incentives for more and more people to push the system forward and strengthen its security, and strong political, economic, and technical disincentives that discourage attacks.

 

Certainly, Bitcoin isn’t too small to draw the attention of governments. Previous attempts at parallel online digital currencies, like e-Gold and Liberty Reserve, were shut down by the US government before even making it to $10 billion in market capitalization. Bitcoin now has a market cap north of $1 trillion. Every day Bitcoin survives, it becomes stronger, and for many attack vectors, the windows are rapidly closing.

 

Coding, mining, infrastructure, and markets are all independent, happening in competing jurisdictions and geopolitical rivals, often done by anonymous or pseudonymous actors, all with different philosophies and goals, but with one uniting motivation: to keep Bitcoin going.

 

Unlike every other cryptocurrency, there is no central point of failure. Bitcoin has no Vitalik Buterin, no Ethereum Foundation, no Deltec bank like Tether, no fancy offices in San Francisco, no team of lawyers, no governance token, no VC-backing, no pre-mine, no small council, and no whales able to manipulate the system. This decentralized architecture has already insulated Bitcoin from attacks at the highest levels. No matter how much Bitcoin you own, you can’t change the rules, print more, censor, steal or prevent others from using the network.

 

Arguably the most powerful financial force in the world - the US government led by then-Treasury secretary Steve Mnuchin - just launched an attack on Bitcoin in December 2020. It was not a particularly strong one, but still, an attack nonetheless, which would have forced US exchanges to gather more information about individuals withdrawing their Bitcoin to wallets they control than even mainstream banks collect, handing the surveillance state much more intricate knowledge of Bitcoin’s flow of funds. But the crackdown failed, stymied by a broad coalition of opposition, and Mnuchin is now gone.

 

The new US regulatory regime might be less aggressive. In fact, incoming SEC chairman Gary Gensler once taught a class about Bitcoin. Cynthia Lummis, a freshly elected Senator from Wyoming and passionate Bitcoin supporter, has been named to the Senate Banking Committee. That means one of the most powerful bodies in the US financial system now sports a member who recently tweeted about Bitcoin: “I came for the store of value. I stayed for the censorship-resistance.”

 

The fact is, despite constant fear-mongering about how Bitcoin could fail, all users have always been able to transact. There have been no significant acts of censorship. Attempts to disrupt the protocol or the network infrastructure would be incredibly difficult and costly to attempt, and have no guarantee of success ... even if powers are able to amass a super-majority of the hashrate, they could be defeated by the network’s decentralized architecture.

 

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