5

Note that this is a question about Bitcoin that is separate from my other question, which had asked whether Bitcoin is a pyramid scheme.

Jamie Dimon, the CEO of JP Morgan, claims that the governments from around the world can -- and will -- crush the value of Bitcoin, eventually:

Governments are going to crush bitcoin one day because they like to know where the money is, who has it and what are they doing with it, said Dimon. They like to control their currency and their economy. China has already put curbs on bitcoin. Dimon added that Japan has accepted yen cryptocurrency and not bitcoin. There is a use for bitcoin if you live in Venezuela, Cuba, North Korea or if you're a criminal, concluded Dimon.

Source: https://www.benzinga.com/media/cnbc/17/10/10177531/dimon-thinks-governments-are-going-to-crush-bitcoin-one-day.

Can governments really destroy the value of Bitcoin, if they wanted to?

Improve this question
8
  • 10
    The claim based on the quote is that they will crush bitcoin, not its value. They aren't necessarily the same (you can do that by outlawing use, or mining, without affecting the value)
    – user5341
    Commented Feb 12, 2018 at 14:46
  • 2
    @user5341, I'm pretty sure that outlawing Bitcoin in major countries would affect it's value, because of the sudden drop in demand. But it wouldn't be directly caused by the government.
    – Arcanist Lupus
    Commented Feb 12, 2018 at 14:57
  • 3
    On Bitcoin.SE: bitcoin.stackexchange.com/questions/366/…
    – Nate Eldredge
    Commented Feb 12, 2018 at 16:25
  • 8
    As the value of bitcoin is only in public perception, anything can destroy the value of bitcoin. It has no inherent value.
    – Rory Alsop
    Commented Apr 13, 2019 at 16:40
  • 3
    @RoryAlsop OP can probably not accept it though since he has a network-wide ban until May 2046.
    – pipe
    Commented Apr 13, 2019 at 23:03

1 Answer 1

Reset to default
1

Yes. There are exactly two ways.

Bitcoin, or more specifically the blockchain, needs constant auditing by powerful computers which have power as well as cooling needs. If the government controls electricity, as China does, they can effectively choke out the bitcoin miners (auditors) in their country. If the number of miners goes down to the point where any one party is doing a majority of the mining, bitcoin or any other cryptocurrency is no longer decentralized, loses all its value and is no longer anything more than Monopoly money that can be traded as a novelty. Note that any one government can't do this, several governments have to act at once.

A single government could destroy bitcoin by executing what's called a "double-spend attack" or "51% attack" either they can do exactly the opposite of what I described above and expand mining in their own country to brute-force most of the mining to go through their own controlled channels, in which case they have centralized control. This is hard to do, but in a country like China they have the raw materials and population to pull it off. Otherwise, they can more elegantly trick the governance mechanism of the blockchain into taking their fraudulent record of the chain as the real record which can be used to effectively reverse any transaction. If this happens people will lose faith in the blockchain and give up on cryptocurrency which will reduce it's value again to that of a novelty.

If you want to dig deeper into a double-spend attack check this out: https://medium.com/coinmonks/what-is-a-51-attack-or-double-spend-attack-aa108db63474

Beyond choking out the miners or performing a double-spend attack, there's absolutely nothing a government can do. As long as a cryptocurrency is decentralized and authentic, the value is effectively set by the global community and is out of reach of any one government.

Improve this answer
3
  • 15
    Welcome to SE.Skeptics! This seems to miss some obvious attack vectors. For example, a government can arrange a backdoor in popular mining platforms (if they haven't already). Or they could outlaw Bitcoin and then track down anyone who uses it, making the risk-adjusted cost-of-mining far too high for anyone to bother with. Or they could have firewalls inspect traffic and block anything that looks like it's Bitcoin-related, e.g. as some countries do with VPN. Or they could buy up tons of Bitcoin themselves, then crash the market. Or.. well, some harsher measures, too.
    – Nat
    Commented Apr 14, 2019 at 7:45
  • You can't put a backdoor into the blockchain itself. You could attack cryptocurrentcy trading platforms that way, but as soon as an exchange is compromised people will stop using it. Tracking down people who use bitcoin isn't doable. There are efforts to use machine learning to deanonymize Bitcoin, but there is no way actually do that. As far as firewalls, the actual trading of crypto doesn't happen like a web request to Facebook. One transaction takes place all over the world. So obvious vectors yes, but not feasible.
    – hSherlock
    Commented Apr 14, 2019 at 16:11
  • 2
    @hSherlock Just a nitpick - people won't stop using it as soon as an exchange is compromised. People will stop using it as soon as an exchange is compromised and the problem made public. You won't have any idea of what the platform of your choice is doing with your personal data. They could easily sell the info you had, say, 500 bitcoins on your wallet to any criminal party, and this party could readily prepare an ambush on your loved ones. For any onlooker, this is indistinguishable from dumb luck (or lack thereof).
    – T. Sar
    Commented May 14, 2019 at 16:00

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .