How to kill a Cryptocurrency Series: Government Shutdown

cryptoshaman (43)in #cryptocurrency • 8 years ago

With the rise of new cryptocurrencies there's also the need to clear up delicate questions. For example: Can Cryptocurrencies be shut down by the government, hackers, bot networks and so on. Well, in the end you always come back to one leading factor: It's a human invention. So far our ideas aren't outliving ourselves, that will probably only change with real artificial intelligence. So for now we're guiding our machineries with our cause - and depending on how you view it - the cause differs greatly.

Welcome to the first part of my 'How to kill a Cryptocurrency Series'. We start with Government Shutdown.

There's certain factors that define a true cryptocurrency.

It is decentralized, which means it has no central reigning authority
The ledger system (blockchain) works with mathematical proofed encryption, which means there's no possibility to manually cheat the system
The protocol code is open-source, which means it can freely audited (and changed) by any human being

Every cryptocurrency differs in the details and on what it wants to achieve, but these points make it a crypto currency.

What a government (in one country) could do, is to outlaw the use of a cryptocurrency. Now, this works for every day items like drugs, but not with a digital replicable idea.

If you regulate (Money Laundering Laws) or ban a cryptocurrency in one country, you need to track the use of it. That really worked with drugs, guns, filesharing, darknet markets and general encrypted data. You can ban people from accepting it from shops and build a stronger entry barrier, but there still remains the anonymous or personal markets. Also, you do free marketing for the currency, which will work against any control effort. You can't shut down the internet, sticks and stones won't break it's bones. As long as you're not living under a dictatorship (Please check thoroughly if you are ;) ) you should be fine.

One probable option for a government is to do persistent attacks, like DDOSing the network itself with a huge amount of transactions that make it impossible to send or receive data. The attack vectors would be open nodes that sustain the network. The more nodes the system got around the world, the better. Here's a nice map on how Dash Masternodes are located around the world: http://178.254.23.111/~pub/Dash/Masternodes_Map.html

Another is, to attack the blockchain backbone itself: If the government can get it's hands on at least 51% of the network's hardware, it could disrupt the security of it by censoring transactions or fully stopping it's support. Likewise, the government could work secretly on their own hardware to oversaturate and eventually crash the network's capabilities.

Trying do destabilize the cryptocurrency with a huge influx of currency volume could also turn out to a major annoyance. If the market cap is low, one entity can buy lots and lots of assets over time and dump them randomly. This will crash markets and create volatility that renders the everyday use of a cryptocurrency useless.

The usual method would be (and are) hard propaganda shenanigans. As a lawful citizen you don't have much to do with digital currencies anyway, so it's not a biggie for you to believe that they just want to keep you safe from the crypto spawn of evil. They only publicize the bad uses-cases of the currency (which of course are not available with fiat money haha) and try to smear it's image. You won't be able to spread the word about it, because it makes you look like a criminal.

There are presumably more options, but these would be the 'best-practices' of the friendly private sector agent. In itself it's not a biggie - New inventions were mocked throughout the ages and in the end it's always about one class of people keeping control of another class of people.

The good news is, that incorporating cryptocurrency like systems in the real world, will improve our lives more than they will destroy. In any way, these are the beginnings of cyberpunk, and it's awesome to be on that right.

Stay tuned for the next post in my series.