We hear a lot about governments wanting to ban cryptocurrency and when will they step in and crush this entire market?
This is an absurd idea. Anyone who understands what cryptocurrency is along with how it is transmitted will realize that it is impossible to stop any of this. In short, the governments of the world were not designed to deal with this.
As I stated on a number of occasions, governments are heading to the scrap heap, at least the nation-states. It will not happen over night but we can expect the demise of this type of system by the end of this century.
Governments, as they are today, were designed to operate in the physical world. They ruled over people who are in a certain geographic area. This made things very simple. Whoever was within the borders had to adhere to those rules. It was all dependent upon where one popped out of the womb. Essentially, where one landed is what determined which government was in control.
We are no longer in just a physical world. For the past 30 years we have moved into the digital realm. This was a slow process which is accelerating now. To add to this, we are also getting very close to embarking into the virtual world. Thus, we will be operating in many different "realities".
Our governments cannot operate in these arenas. It has repeatedly proven that. The legal, monetary, and economic system is ill-equipped to deal with the variances that comes with these new worlds.
In the private realm, companies that are unable to deal with what is taking place go out of business. Both Blockbuster and Kodak are two companies that were crushed by digitization and a new mode of delivery. Governments, on the other hand, can operate a bit longer than private entities. Nevertheless, there fate is sealed.
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Just show of two decades ago, there was a company that was all the rage. Napster sprang onto the scene and created an uproar in the music industry. The company was simply a file sharing company. This set the music industry on its ear. Suddenly, millions of teenagers were sharing files of songs, for free. This really cut into the revenues of the record companies.
They, of course, turned to the legal establishment for help. Copyright laws, after all, were designed to protect them. It was failing.
Long story short, the record companies ended up suing a number of people and getting some judgments against them. They were able to put people on the hook for thousands of dollars. All told, the record companies lost millions. Many of them went out of business. The ones that remained, lost money on recorded music for 16 straight years.
What did Napster do?
It basically enabled two computers (nodes) to share a file between them. It was an application that enable the joining of the two different users, providing a "handshake". Of course, if the one with the file wasn't online, there were others who were seeding the network.
Basically, Napster provided the forum to enable peer-to-peer file sharing.
The problem for that company is that it was centralized. It could be attacked and was. This caused it to have to alter course, one that essentially destroyed the business.
That was not the end of file sharing. A host of others such as Kazaa, Limewire, and more sprang up. Each time the government hit one, another popped up. This is overlooking the fact that the Usenet still exists where, as long as one has a reader, files can be downloaded from there.
At its most basic level, what was shared between the different nodes was nothing more than data. This is a very important point. Because of what took place, the government was completely impotent at stopping it. Their only success was going after the centralized entities.
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Which brings us to Bitcoin (and other cryptocurrencies).
Bitcoin is a decentralized network that performs a similar service to Napster. Here, the network will enable two wallets to interact, with currency sent from one to the other. However, it is vital to remember what this truly is.
It is basically the same system.
We have two nodes that are sharing data in a peer-to-peer fashion. Whether that data is a song or currency, the governments are equally unable to stop it. With decentralized networks, unlike Naptster or Kazaa, there is no company to go after. Thus, their (the governments) one target area is eliminated.
This is why decentralization and distribution is so vital. Anything that is centralized contains a point of vulnerability. It is an attack vector. Decentralized systems, on the other hand, cannot be stopped.
And this is why Bitcoin, along with other cryptocurrencies, are invulnerable to government interference. Outside the centralized exchanges, the tools the government's have are completely worthless. That is because it was not designed to operate in this realm. Therefore, it is the proverbial fish out of water to begin with.
Try to keep this in mind the next time someone claims that the government is going to stop Bitcoin.
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