Ever since the inception of Bitcoin in 2009, there has been a massive question looming in the air, with governments either letting cryptocurrency live or killing it. Governments around the globe, whether in America, Asia or Africa, are responding differently. Others are attempting to control crypto, others are attempting to prohibit it, others are warming up to it. This question is of great importance to traders, investors and the common man like me here in Nigeria as our lives and our savings can be influenced by the actions of government leaders.
The thing is that there are numerous facts that governments are afraid of crypto. The first reason is control. Central banks have regulated money by governments over a long period of time. They print it, control it and watch it. In crypto, that control is less significant. Cryptocurrencies such as Bitcoin, Ethereum, and so on do not require approval to be transferred by any central bank. In case I would like to transfer Bitcoin to my cousin in Ghana, I have ability to send it directly without any bank. This freedom does not auger well with governments since they find it difficult to trace money flow.
The second is taxation. It is the governments that collect taxes to operate the country. However, when individuals are earning in crypto in massive amounts, and the government cannot see and document such earnings, the taxes are missed. In Nigeria, as one example, a number of individuals sell crypto peer-to-peer. These transactions occur outside the banks and thus the government cannot easily monitor these transactions. This is another factor that causes governments to occasionally crack down on crypto.
Thirdly is crime and fraud. Criminals have been reported to have laundered money and scammed and even ransomed people around the world using crypto. As crypto is anonymous, governments believe that it offers a means through which criminals are running away. In Nigeria, fake crypto schemes have made many people lose their money in the claim of giving quick returns. This causes governments to perceive crypto as a threat to be put under control.
However, here is the thing: crypto is not as easy to kill as most people believe. Cryptocurrency is based on decentralized technology. It is not situated in a single office or a single building that can be closed. An example is Bitcoin which is supported by thousands of computers worldwide. All of those computers would have to concurrently fail to operate to put that beast out of business. That is almost impossible.
Governments can however, make life hard on crypto users. It has already been experienced in Nigeria. In 2021, the Central Bank instructed the banks to cease crypto transactions. In the middle of the night, citizens ceased to purchase or sell crypto with their bank accounts. Many thought this was the end. However, the citizens of Nigeria soon switched to peer-to-peer sites. Despite the restrictions, Nigeria is still one of the largest crypto markets in the globe today. This demonstrates that crypto may not be completely killed but only slowed down by governments.
Other nations provide us with more examples. In China, the authorities prohibited crypto-mining and made it illegal to trade. However, Chinese individuals continue to find loopholes to get access to crypto using foreign applications and VPNs. Conversely, such nations as El Salvador legalized Bitcoin as tender, which also implies that it can be used to pay daily as dollars. The crypto is not prohibited by the government in the United States, and the government is introducing stringent laws via SEC and other bodies. All these reactions indicate that governments are yet to make decisions on how to address crypto.
Whether governments will kill crypto is not actually the question, but whether they will adjust to it is. Most analysts are of the view that governments can never halt innovation. Crypto will survive just as the internet did when it was initially introduced into the market. Governments can opt to control it instead of killing it but in such a manner that safeguards the users and yet provide them with freedom.
We are already experiencing this even in Nigeria. The government subsequently prohibited banks to deal with crypto and subsequently permitted licensed institutions to provide crypto-related services but on a strict basis. Meanwhile, the Central Bank introduced the digital version of naira, the eNaira. Even though the use of the eNaira is not widespread as of now, it is an indication that the government is not dragging its feet on digital finance but slowly adapting to it.
A large factor that makes crypto impossible to kill is that crypto is addressing real problems. Stablecoins are used to save money in nations where the currency is weak and there is high inflation. In nations where transferring remittances is very costly, individuals resort to crypto in making transfers at low costs. Crypto is the first exposure of people to the world of financial services in countries where banking services are scarce. These issues will remain, and people will run to crypto, with or without the consent of the government.
Naturally, that does not imply that the road will be paved with gold. New rules are always being added by governments and in some cases the governments will attempt to limit use. The traders and investors will be called upon to evolve in order to meet the new environments. However, the concept that governments will kill crypto to death is not plausible.
As a Nigerian who has experienced both the ban and the survival of crypto, in my own opinion, the governments will eventually have to see that it is better to collaborate with the technology than confront it. Already, blockchain is being tested by global organizations and even banks. PayPal and Mastercard are also big enterprises that are incorporating crypto into their systems. When this kind of powerful institutions are shifting into the space, then no government will be able to halt the wave.
To sum up, governments might not like crypto, they can attempt to control it, and even ban, but they cannot kill it. The fact is that the crypto has already propagated too far around the globe. It is being used all over the streets of Lagos to the Silicon Valley offices. Governments can influence the application of crypto, but they cannot kill it.
0.000 SRY