Can the Government Shut Down Bitcoin?

At some point on everybody’s Bitcoin journey, they realize that Bitcoin may actually be a better form of money. They recognize that it has several vital traits (supply capped, digital, censor­ship-resis­tant, etc…) that make it better than their government’s currency. However, the govern­ment benefits from printing its own currency. So people fear their govern­ment will try to shut down Bitcoin. 

Fortu­nately, Bitcoin was purpose­fully designed to be resis­tant to the government’s attacks. Bitcoin’s founder, Satoshi Nakamoto, studied the past failures of non-govern­mental curren­cies before he developed Bitcoin. He realized that many past non-govern­ment curren­cies (like E‑gold or Liberty Dollar) failed because there was a central­ized point that govern­ments could attack. So when the currency got too big, the govern­ment would take the CEO to court, raid an office building, or disable the small network of computers that ran the currency.

Bitcoin was designed to be resis­tant to these types of attacks. There is no Bitcoin CEO. There is no single physical location of Bitcoin. There is no one-building that Bitcoin is stored in. Instead, it is stored and run by thousands of computers (aka nodes) all over the world. 

Even if the US govern­ment tried to track down all of the computers running Bitcoin in the US (which would be impos­sible given that many are run in rural, totally secret locations), they still wouldn’t be able to kill the network. Any American with internet access (or even radio access!) could still commu­ni­cate with the Bitcoin computers running the software in Ethiopia or Indonesia. So Ameri­cans would still be able to access and send their Bitcoin. So long as one person anywhere in the world is running the Bitcoin software, Bitcoin works.

If govern­ments cannot easily kill the network because there is no single weak point to attack, people then fear that they will try to ban Bitcoin. This is a slightly more credible threat. Govern­ments could pass laws making it illegal to own, buy or sell Bitcoin. After all, govern­ments have tried to ban other things (like Brie cheese, saggy pants, kissing on Sundays, marijuana, and alcohol during the prohi­bi­tion). But Bitcoin has some advanced privacy features that make enforce­ment of a ban very diffi­cult. It’s very easy to hide your Bitcoin and very diffi­cult to prove that you own it. And if people find Bitcoin useful, they will probably keep using it regard­less of the ban! 

That said, we don’t expect the US govern­ment to ban Bitcoin. After all, it seems like they are being increas­ingly supportive of Bitcoin. However, if the winds shifted and they did begin to try to attack Bitcoin, they would fail. Bitcoin’s decen­tral­ized computer network assures that a govern­ment cannot kill Bitcoin.