The looming threat for blockchain

Blockchain technology is slowly disrupting many major industries. Logistics, healthcare, finance, education – those are just a few of the many. As people buy Bitcoin and cryptocurrencies enter once again into the attention span of the public, we expect to see blockchain being integrated into our day to day life.

But not everyone likes the idea of full transparency, and the ability to track things in a decentralized manner. Our society maintains its order thanks to privacy, and blockchain is set to gradually diminish it.

Not everyone likes the idea of blockchain technology

While most people and companies are excited about the transition to blockchain technology, not many think long-term about it. Let’s take finance and currencies for instance. At the moment, there is an enormous amount of money that is responsible for illegal activities: drug money, the black budget, untaxed cash, and more.

In many cases, all this money is stored and distributed in paper form to avoid backtracking its origination. Naturally, blockchain technology will eventually eliminate the need for cash, which could be catastrophic for those operating such activities. Unless these parties are already actively transitioning their cash into cryptocurrency, they may soon have a serious problem, and this includes governmental institutions.

One may think that it is then only natural that the government decided to put a permanent hold on Libra late last year, shortly after Facebook announced its development. It may also be the reason why many countries are currently imposing bans upon it. 

What happens if Bitcoin becomes a threat to governments?

At this point, we can start imagining different scenarios in which Bitcoin would become too hard to control, a foundational element that makes governments as powerful as they are today. In short, any of the following could happen:

1. Governments ban Bitcoin – Some countries, like India, already have a ban on Bitcoin purchases and transactions. If a full ban would occur the price would experience a dramatic drop in value since its liquidity will likely decrease. This, however, doesn’t necessarily mean that Bitcoin would become less valuable. At the moment, even in India, people are actively buying and exchanging cryptocurrencies in a P2P fashion. However, if more influential continents like America or Europe decide to limit exposure, there might be a serious problem.
2. Governments buy up Bitcoin – Since BTC can be purchased with FIAT currencies and governments can print it at will, we could experience an active suppression effort that would look as follows. 
   1. A particular government prints enough money to buy up a significant amount of Bitcoin (±10%). This is done in multiple orders over a longer period of time to maintain price stability.
   2. The same government then sells the coins in the open market, causing a massive drop in the coin’s value. 
   3. At this point, the large buyer scoops up as much Bitcoin as possible at a lower price point and is able to control the direction of the market.
3. Bitcoin wins – This scenario could potentially become a reality much later in the future. In this case, we could see the USD fall and Bitcoin replacing it as a global currency. At this point, it would be tied with major digital currencies, like the Digital Yuan, and others. This would help it become usable for international commerce between nations. As for its price? If the global GDP would transfer into Bitcoin, the value of each coin would exceed $10.000.000.

What does this mean for blockchain technology?

In contrast to Bitcoin’s decentralized ledger, we will probably see certain blockchains become heavily adjusted in order to fit the “mold” that our society is built upon. For example, blockchain-based voting systems, or even banking systems would naturally entail more privacy for the authorities responsible. These same parties will continue to pursue power since, without a central point of authority, we would experience chaos on a global scale.

But there is good news as well – with blockchain technology becoming more and more popular, there is more chance that we will eventually enter into a more decentralized and transparent way of tracking what is important for us.

Closing thoughts

While blockchain threats may seem irrelevant at this point, there will come a time where transparency will become a problem for some. As soon as the time comes (and it could be faster than you think), we will see more and more people trying to suppress its influence over the modern world.

In any case, these types of measures will most likely act as temporary measures. As we mentioned above, even with a permanent ban, Bitcoin could continue to grow if the demand continues as well. Remember that gold became illegal in the United States for 30 years in our recent history and it still maintained its value over all this time.