Crypto Ban in China – Can crypto be stopped?
The Chinese government is at it again. They have decided to deem every transaction that happens in crypto to be illegal. This has certainly had a negative impact on the overall market, which plummeted after the announcement has made. While this move is certainly worrisome for the crypto community in China, we must understand that if there’s one thing that can stop crypto, it is certainly not any government.
China’s ban comes amid an ongoing backlash the government is facing for its stance on the Evergrande crisis. While this is certainly not the first time the Chinese government has attempted to put a ban on crypto, some are purporting that they are indeed quite serious this time. For all we know, they could indeed be serious. But the truth simply is that a blockchain cannot be stopped.
When Satoshi Nakamoto outlined his ideas for a decentralized cryptocurrency that could be transferred without having to rely on a trusted third party. he had already thought about the ramifications something as revolutionary as that could have. Any centralized authority or a pretentious government-inspired watchdog would try and hamper the system and impede it from running. But that wasn’t architecturally possible given that the Bitcoin network stretches far and wide and the engine behind the cryptocurrency is the millions of miners that live in different parts of the world.
So, if a government needs to stop any cryptocurrency, it must stop its engine, which in the case of decentralized cryptocurrencies such as Bitcoin and Ethereum are its miners.
While this argument is very strong, it is often countered with the following chart.
The darkened section on China is alarming to most users of cryptocurrency as they see that most of the mining power is based out of the country. We cannot disregard this fact completely as most mining power does come out of this enormous nation.
However, we mustn’t ignore the fact that just because China does not legalize crypto transactions within their country, other miners spread all over the world will also give up their mining hardware and forget about crypto. In fact, because the mining power is so worryingly concentrated, it would be good if miners living in other countries decide to amp up their mining hardware, in an attempt to increase their capacity.
This will help in the further redistribution of mining power all over the world.
You can't stop what is not centralised
And the most crucial point that we need to understand is that with decentralised blockchains like that of Bitcoin and Ethereum, there is no single point of failure. If you destroy 5 nodes on the blockchain when it has other 25 nodes running all fine, then you are not really stopping cryptocurrency. You are merely preventing them from converting any crypto that they have into fiat currency. They can still hold its reserves and transfer it within the decentralised finance ecosystem. As long as they are not doing any transaction with fiat currency, they are fine!