Bitcoin has been on the fringes of global financial markets for almost a decade. This asset class has always been gaining in importance. Can the government of a larger country still do the unthinkable – and prohibit Bitcoin?
Flashback – The possession of illegal gold
Those who believe that governments (except those with dictators) would not take the extreme step of banning bitcoin need a brief lesson from history. There was a time when owning gold bars was a crime in America. Up to ten years in prison were threatened. In 1933, the American President Franklin D. Roosevelt issued an order urging all Americans to transfer their gold holdings to the Federal Reserve Bank. The ban on the possession of gold remained in place for more than four decades before President Ford legalised the possession of gold. This step was legitimized by the fact that America left the gold standard a while earlier. In other words, since the American government no longer saw the need to have the amount of notes it printed available in equal relation to gold, the Federal Reserve Bank was able to sell’its’ gold.
The Great Chinese Firewall
Another argument that Bitcoin cannot be banned by governments in an age of the globalized Internet economy is that they do not have the authority or power to do so. However, we also had to watch as China even set up its “own Internet”. Through a mixture of state legislation and the blocking of popular foreign websites by Chinese Internet providers, the government of China has tried to limit its inhabitants to a walled garden instead of letting them look at the entire World Wide Web. Traffic control instruments are used by the government to suppress political disagreements. Nevertheless, it would be a problem for the Chinese government to take the step of finally banning Bitcoin.