What if governments make Bitcoin centralized?

[Yamifoud]

I think that this is far from it. But I see that Bitcoin is already a very effective tool for influencing

This is definitely far from reality. Why would a government end up centralizing bitcoin? Knowing bitcoin is decentralized, so it can never be fully controlled by the government or any group or entity. But once its centralized, the government will all have the access on it. But take an example from China, they have created digital yuan which is definitely centralized in the first place, so they started banning bitcoin so that its citizens will stop using it and focus on their own digital currency. Maybe that will also be the case of other countries' government and they would not waste time on adopting bitcoin anymore.

A reason why many would like to keep Bitcoin over fiat is that because the government has no control. But, it was to see that they are taking steps to get through it and possibly will control cryptocurrency someday. And if this going to happen, we don't know what will happen next but I think that these crypto investors and users will still invest in them. I don't think that they will stop this stuff but rather continue it under their control coz what they want is these users and holders will pay tax.

[harlequininja]

A reason why many would like to keep Bitcoin over fiat is that because the government has no control. But, it was to see that they are taking steps to get through it and possibly will control cryptocurrency someday. And if this going to happen, we don't know what will happen next but I think that these crypto investors and users will still invest in them. I don't think that they will stop this stuff but rather continue it under their control coz what they want is these users and holders will pay tax.

That tweet by Jonas Schnelli made me really think in that respect. Sounds a bit as if government agencies are already building up pressure.

Jonas Schnelli
@_jonasschnelli_
You may ask, why step down now? What happened?

Sometimes, interests shift and you can’t do much about it.

On top, I feel that the legal risks for Bitcoin developers are increasing year by year (which can be stressful).

New contributors should join anonymously (it’s tricky).

And this is the latest proposal form the EU


https://eur-lex.europa.eu/resource.html?uri=cellar:0a4db7d6-eace-11eb-93a8-01aa75ed71a1.0001.02/DOC_1&format=PDF

The proposal contains a provision preventing traders in goods or services from accepting cash
payments  of  over  EUR  10  000  for  a  single  purchase,  while  allowing  Member  States  to
maintain  in  force  lower  ceilings  for  large  cash  transactions.  This  ceiling  does  not  apply  to
private operations between individuals. The Commission must assess the benefits and impacts
of  further  lowering  of  this  threshold  within  three  years  of  application  of  the  proposed
EN 11  EN
Regulation.  The  provision  and  custody  of  anonymous  crypto-asset  wallets  are  prohibited.
Companies  that  are  not  listed  are  prohibited  from  issuing  bearer  shares  and  are  required  to
register  those  shares.  The  issuance  of  bearer  share  warrants  is  only  allowed  in  intermediated
form.

I'm a bit wondering why the community and developers are not taking notice of these current developments, or at least it makes the impression.

[Abiky]

I don't understand what made you jump to that conclusion. If governments all over the world suddenly made bitcoin legal tender, that would force almost all population, that is, banks, businesses, individuals, merchants, etc., to switch to that new legal tender.  Not only would it result in a higher price and greater awareness of bitcoin, but also it would result in more people willing to mine bitcoin or run their own bitcoin full node, which would make the bitcoin network even more distributed and decentralized. It is pointless for governments, especially big ones, to promote bitcoin by making it a legal medium of exchange because once people learn about how to be their own banks, they will no longer need to rely on centralized government-controlled entities. Why would they shoot themselves in the foot?

Governments control centralized exchanges so it's easier for them to control most of Bitcoin's supply. The mining part would be harder to achieve, especially when hashrate is scattered all over the world. But I get your point. Bitcoin empowers anyone to be their own bank, so it wouldn't be wise for governments to support Bitcoin as Fiat's successor. It goes against what was established in the first place. While centralization looks highly unlikely, we cannot discard it from happening in the future. The community must always be on alert in order to help maintain Bitcoin as decentralized as possible. Mining pools encourage centralization, so it would be best if people began solo mining the cryptocurrency to prevent this from happening. Fortunately, developers are working on improving the stratum mining protocol to further encourage decentralization. As long as Bitcoin remains decentralized and censorship-resistant, nothing will be able to stand on its way. Just my thoughts

[Chrystora123]

Have you ever thought about Bitcoin becoming centralized someday? The ever-growing mainstream adoption of Bitcoin worldwide will only lead us closer to such scenario. To our surprise, El Salvador became the first country to adopt Bitcoin as legal tender. The more popular the cryptocurrency becomes, the more countries will be tempted to follow El Salvador's footsteps. Imagine governments making their own mining facilities, or even buying pre-established mining companies in order to gain a piece of the pie. If they manage to control more than 51% of Bitcoin's hashrate, the cryptocurrency will effectively become centralized. That, and the fact that they already control centralized exchanges is a very alarming situation for the future of Bitcoin.

Of course, the only way governments worldwide will be able to control 51% of Bitcoin's hashrate is if they unanimously agree on using Bitcoin is a "One World Currency". This may all sound crazy, but we cannot ignore it from happening in the future.

What are your thoughts? Will Bitcoin be able to remain decentralized for the foreseeable future? Or not? What do you think will happen if governments fully embrace Bitcoin as the replacement of Fiat? Your input will be greatly appreciated. Thanks.

if the government wants to control bitcoin by controlling 51% of bitcoin circulation then how much money they have to spend while, they will print as much money and make fiat into goods that will no longer be worth it.  and if the government manages to control 51% of bitcoin circulation then i will sell my bitcoin and buy another altcoin then wait to buy the bitcoin price drops..

[Distinctin]

If governments legalize Bitcoin as legal tender, then there should be nothing stopping them from centralizing the cryptocurrency in its entirety. It'll be the end of decentralization as we speak.

I don't understand what made you jump to that conclusion. If governments all over the world suddenly made bitcoin legal tender, that would force almost all population, that is, banks, businesses, individuals, merchants, etc., to switch to that new legal tender.  Not only would it result in a higher price and greater awareness of bitcoin, but also it would result in more people willing to mine bitcoin or run their own bitcoin full node, which would make the bitcoin network even more distributed and decentralized. It is pointless for governments, especially big ones, to promote bitcoin by making it a legal medium of exchange because once people learn about how to be their own banks, they will no longer need to rely on centralized government-controlled entities. Why would they shoot themselves in the foot?

Exactly my sentiment as stated above. However I would also add the fact that if a government someday, somehow manages to centralise Bitcoin, then there will be other crypto's to take its place. Especially privacy coins. So trying to decentralise Bitcoin is not something that the government can do, I believe. And attempting it in the first place will only lead to a waste of money and time.

There's already a lot of governments who tried to manipulate or control bitcoin to make it centralize and make them the watch keeper about its transactions, but no government made a successful attempts including the famous Chinese government (CCP). It almost ridiculous to see and to know that the government is ready to waste some funds and time just to try to override the bitcoin system. And that's why the US government made the first cryptocurrency called the USD Coin (USDC). Bitcoin will always remain untouchable that's why bitcoin is the most safest and trusted coin of all time, thanks to the creator, SN.

[Altryist]

if the government wants to control bitcoin by controlling 51% of bitcoin circulation then how much money they have to spend while, they will print as much money and make fiat into goods that will no longer be worth it.  and if the government manages to control 51% of bitcoin circulation then i will sell my bitcoin and buy another altcoin then wait to buy the bitcoin price drops..

Regulators will do their best to control cryptocurrency in the same way they control fiat money. I will even say that with the help of a regulated cryptocurrency, governments will get full control over the movement of people funds. And without regulation, they will not allow cryptocurrencies and bitcoin in particular as a means of payment in the state.

[patientforzhou]

I feel that this problem is just a joke. Is it boring to face and talk about an impossible thing? Bitcoin has only two paths, one is free development and the other is collapse. There will be no government control. If so, Bitcoin would not be Bitcoin. It doesn't make much sense. If you have enough time, it is better to improve your knowledge and study hard. The digital world is changing very quickly.

[kingangel]

Why would the government make BTC centralized? It's impossible as they didn't have the control of the transactions nor the "central core" wherever it is now or if it does exist. However, regulated crypto wallets and exchanges can be controlled and we don't have the full custody despite low trading fees and fast transactions.

[dataispower]

Why would the government make BTC centralized? It's impossible as they didn't have the control of the transactions nor the "central core" wherever it is now or if it does exist. However, regulated crypto wallets and exchanges can be controlled and we don't have the full custody despite low trading fees and fast transactions.

Government made fiat currency centralized and saying that  government wants to make bitcoin centralized, i support you because is not possible, maybe it will happen when this present bitcoin die off and another kind of bitcoin emerge for second world, i believe and also know that bitcoin is independent from the ages because starting from the price, no body control the market of bitcoin except it liquidity and market determination, we are talking the same thing, but let us know in case we don't know that government don't have control over bitcoin, they have control over gold and fiat but cryptocurrency government don't have hand

[Abiky]

There's already a lot of governments who tried to manipulate or control bitcoin to make it centralize and make them the watch keeper about its transactions, but no government made a successful attempts including the famous Chinese government (CCP). It almost ridiculous to see and to know that the government is ready to waste some funds and time just to try to override the bitcoin system. And that's why the US government made the first cryptocurrency called the USD Coin (USDC). Bitcoin will always remain untouchable that's why bitcoin is the most safest and trusted coin of all time, thanks to the creator, SN.

USD Coin is NOT issued by the US government, but rather a private company with its own interests. While controlling Bitcoin is highly unlikely to happen, there's always the risk of failure. We should be prepared for the worst, as governments and central banks do everything in their power to put an end to Bitcoin and Blockchain technology. The greater the hashrate, the harder it'll be for governments to successfully perform a 51% attack on the Blockchain.

What governments might do is control a large portion of Bitcoin's circulating supply, by manipulating centralized exchanges to their own will. But coins are largely distributed worldwide, so the chances of this happening are very slim. Take into account lost and/or stolen Bitcoins, and you'll see what I'm talking about. As long as Bitcoin remains decentralized and censorship-resistant, it'll last a lifetime. Just my thoughts

[molsewid]

Why would the government make BTC centralized? It's impossible as they didn't have the control of the transactions nor the "central core" wherever it is now or if it does exist. However, regulated crypto wallets and exchanges can be controlled and we don't have the full custody despite low trading fees and fast transactions.

Even if the government would want to make cryptocurrency especially bitcoin a centralized platform I am also thinking about how would a government would make it? I mean we all knew that cryptocurrency is a decentralized platform and that is also the reason why most of governments would not want to make cryptocurrency become a legal tender in their respective country. So I am thinking that the thought of what if governments make bitcoin centralized is impossible.

[panukurap]

The government allowing Bitcoin to replace fiat is unlikely. If Bitcoin is allowed as a transaction tool it is possible but if it replaces fiat it is not possible. Bitcoin and fiat can be run side by side. There are still many people who are less responsive to technology, therefore they will definitely be much more comfortable using fiat in transactions. The government will also not get out of hand from fiat, especially Bitcoin cannot be controlled by the government so the government must as much as possible maintain fiat so as not to be eliminated by Bitcoin.

[LUCKMCFLY]

Why would the government make BTC centralized? It's impossible as they didn't have the control of the transactions nor the "central core" wherever it is now or if it does exist. However, regulated crypto wallets and exchanges can be controlled and we don't have the full custody despite low trading fees and fast transactions.

Even if the government would want to make cryptocurrency especially bitcoin a centralized platform I am also thinking about how would a government would make it? I mean we all knew that cryptocurrency is a decentralized platform and that is also the reason why most of governments would not want to make cryptocurrency become a legal tender in their respective country. So I am thinking that the thought of what if governments make bitcoin centralized is impossible.

You are right, a government cannot have control of BTC, the efforts they make will be in vain because the majority of Strong Hands would not allow the millionaire market to fall into those hands, neither of the banks, it is practically impossible for that to happen, BTC lives on supply and demand and obviously there are whales and institutions that did not buy to lose money, if we take this into account, they are capable of waiting 8 to 10 years to sell their BTC and this waiting for BTC to reach the $ 100k which is very possible to happen.

[AliKhan189]

Have you ever thought about Bitcoin becoming centralized someday? The ever-growing mainstream adoption of Bitcoin worldwide will only lead us closer to such scenario. To our surprise, El Salvador became the first country to adopt Bitcoin as legal tender. The more popular the cryptocurrency becomes, the more countries will be tempted to follow El Salvador's footsteps. Imagine governments making their own mining facilities, or even buying pre-established mining companies in order to gain a piece of the pie. If they manage to control more than 51% of Bitcoin's hashrate, the cryptocurrency will effectively become centralized. That, and the fact that they already control centralized exchanges is a very alarming situation for the future of Bitcoin.

Of course, the only way governments worldwide will be able to control 51% of Bitcoin's hashrate is if they unanimously agree on using Bitcoin is a "One World Currency". This may all sound crazy, but we cannot ignore it from happening in the future.

What are your thoughts? Will Bitcoin be able to remain decentralized for the foreseeable future? Or not? What do you think will happen if governments fully embrace Bitcoin as the replacement of Fiat? Your input will be greatly appreciated. Thanks.

The future outlook for bitcoin is the subject of much debate. While the financial media is proliferated by so-called crypto-evangelists, Harvard University Professor of Economics and Public Policy Kenneth Rogoff suggests that the “overwhelming sentiment” among crypto advocates is that the total “market capitalisation of cryptocurrencies could explode over the next five years, rising to $5-10 [trillion].”8

[Tumanggor]

if the government makes bitcoin centralized then the scenario that will happen is that people will not see bitcoin as a "precious treasure" anymore

government makes everything stable then it stabilizes is bad for bitcoin

uncontrollable, unstable and also can not be monopolized is the main goal of the creation of bitcoin, and it was satoshi's wish that wanted to improve the world

[uneng]

I believe governments are not going to try stopping bitcoin, because there are many influent businessesmen investing in bitcoin who are also partners of these governments and there are public agents too, who may invest in bitcoin secretly. So it's not interesting for authorities to embarass the matters of their friends. If they do this, there will be retaliation and these businessmen will take their money and leave the countries where governments acted against their personal interests. It means loss of investments for governments, what isn't positive for their maintenance in power and for the development of the country.

[og kush420]

I believe governments are not going to try stopping bitcoin, because there are many influent businessesmen investing in bitcoin who are also partners of these governments and there are public agents too, who may invest in bitcoin secretly. So it's not interesting for authorities to embarass the matters of their friends. If they do this, there will be retaliation and these businessmen will take their money and leave the countries where governments acted against their personal interests. It means loss of investments for governments, what isn't positive for their maintenance in power and for the development of the country.

IMO government already has made BTC a bit centralized through KYC based centralized exchanges like Binance. Melania Trump has recently launched her own painting as NFT, this shows that top officials have faith in BTC but when they are in power they cant support crypto because of government policy.

[uneng]

I believe governments are not going to try stopping bitcoin, because there are many influent businessesmen investing in bitcoin who are also partners of these governments and there are public agents too, who may invest in bitcoin secretly. So it's not interesting for authorities to embarass the matters of their friends. If they do this, there will be retaliation and these businessmen will take their money and leave the countries where governments acted against their personal interests. It means loss of investments for governments, what isn't positive for their maintenance in power and for the development of the country.

IMO government already has made BTC a bit centralized through KYC based centralized exchanges like Binance. Melania Trump has recently launched her own painting as NFT, this shows that top officials have faith in BTC but when they are in power they cant support crypto because of government policy.

Certainly bitcoin is going to become more and more centralized each new day through new and more strict regulations. I just don't see governments attempting to stop bitcoin by controlling 51% of the mining hashrate or confiscating the supply disponible in the market as it was mentioned in another posts.

But thinking about this matter right now while I'm writting this post, it came to my mind governments could create a regulation to forbid exchanges from operating during determined periods of time, just like traditional markets do to avoid high volatility and price devaluation of the assets. For an example: if bitcoin falls 5%, exchanges must stop all the orders until the next day.

About Melania's NFTs it's a quite curious situation, because Trump has criticized bitcoin as a menace to fiat system some time ago and told the media he was a full supporter of dollar currency, but now his wife's NFTs can be bought with Solana crypto currency...

[thecodebear]

OP,
Governments getting involved in Bitcoin does not make it centralized. I'm totally for governments getting involved with Bitcoin mining - I really hope they do! Bitcoin mining has huge potential to help move the world toward a green energy future and that'll happen much more quickly if governments get involved with mining. I wrote an article earlier this year on Medium talking about how US States should all be involved in Bitcoin mining.

Governments joining Bitcoin doesn't mean it becomes centralized because nothing about Bitcoin changes based on who is involved. Just as it is not bad that companies now take part in bitcoin mining there is nothing bad if governments take part in it too. It would make sense for governments to get involved in the future global currency. Bitcoin is for the world, not just for hobbyists or the poor or the rich or people from first world countries or people from third world countries or for companies or for governments or whatever else. Bitcoin is for all of those things - for everyone. There is nothing bad about more people or institutions adopting and taking part in Bitcoin. All it does is increase Bitcoin's decentralization and increase its presence and importance in civilization.


I always find it odd when people say they don't like rich people or companies or governments or whatever buying bitcoin or doing anything with bitcoin. The power of Bitcoin is that it is free to use by anyone. Wanting Bitcoin to be limited goes against the idea of Bitcoin.

[carlisle1]

Why would the government make BTC centralized? It's impossible as they didn't have the control of the transactions nor the "central core" wherever it is now or if it does exist. However, regulated crypto wallets and exchanges can be controlled and we don't have the full custody despite low trading fees and fast transactions.

Even if the government would want to make cryptocurrency especially bitcoin a centralized platform I am also thinking about how would a government would make it? I mean we all knew that cryptocurrency is a decentralized platform and that is also the reason why most of governments would not want to make cryptocurrency become a legal tender in their respective country. So I am thinking that the thought of what if governments make bitcoin centralized is impossible.

Maybe the only way is to add a third party system that will be used to facilitate every transaction that will happen around the jurisdiction

area of certain country or government who wanted to have central access within Bitcoin system.

I don't have any idea if that's possible or how things may work if the government will pursue with this kind of plan, but Bitcoin itself it's been

created as decentralized, it will work from how it's originally intend being used.