đ°Do you want a chance to win $25 in Bitcoin, paid straight into your wallet? Entry is easy so donât miss your chance to win!đ°
Governments are at it again, with Russia becoming the latest country to scare markets with talk of total bans against cryptocurrencies. More specifically, the Bank of Russia has moved against the industry as it chafes under its impending irrelevance since Bitcoin and related technologies are opening our eyes to the massive overreach by central banks around the world.
Veterans in the space can recall dozens of such bans over the years that have more or less failed while blockchain technologies have flourished. However, new participants are more likely to not know how to navigate what for them may be uncharted waters. As a result, Iâm hopeful that we can together debunk many of the lies and half-truths put out by the conspiracy theorists at the Bank of Russia in the past few days:
Use in Illegal Activities
Owing to anonymity in transactions, money substitutes are extensively used for illegal activities.
There are actually two misconceptions contained in this quote, at least in the context of Bitcoin, and both are relatively easy to debunk:
-
Bitcoin transactions are anonymous.
-
Bitcoin transactions are pseudonymous, meaning that a userâs identity isnât by default tied to their activity on the blockchain. However, all Bitcoin transactions on the layer-1 blockchain are publicly visible at all times. Meanwhile, governments, financial institutions, and blockchain intelligence companies are using KYC and other resources to tie usersâ real world identities to their blockchain identities.
-
-
Bitcoin is extensively used for illegal activities.
-
This accusation stems primarily from cryptocurrenciesâ associations with criminal enterprises like the Silk Road and so-called âget rich quickâ schemes like scamcoins. The truth is however, that Bitcoinâs nature as a public blockchain makes it nearly impossible for illegal financial activities to be hidden from the prying eyes of regulators. This reality can be easily visualized by reviewing the percentage of cryptocurrency value transfers that are related to criminal activities:
-
The above chart comes courtesy of Chainalysis, a blockchain intelligence company
Central Bank Monetary Sovereignty
Cryptoization limits monetary policy sovereignty, which might force [sic] central bank to permanently maintain a higher key rate in order to contain inflation.
The lie here isnât that Bitcoin will reduce the monetary sovereignty of central banks. Such a result is all but assured as citizens realize the astonishing benefits of a Bitcoin-based financial system. Rather, the lie is that quasi-omnipotent control of monetary systems by central banks is a good thing.
The truth is that the Bank of Russia, like many other central banks around the world, fears the loss of its ability to manipulate and control financial markets while accruing significant wealth to the rich and powerful among its ranks and benefactors. Meanwhile, the Bitcoin financial system remains a bastion of inclusion and self-sovereignty since anyone is free to participate at any time on equal footing with everyone else.
Proof of Work and the Environment
Cryptocurrency mining creates unproductive consumption of electric power, which threatens the power supply of residential buildings, social infrastructure and enterprises and the implementation of Russiaâs environmental agenda.
Those who see the Bitcoin blockchain and the Proof of Work consensus mechanism that makes it possible as âunproductiveâ are either ignorantly or maliciously missing the point.
Michael Saylor, the CEO of MicroStrategy and someone who has spent an enormous amount of time thinking critically about Bitcoinâs true value proposition, sums it up rather succinctly:
Similarly, the idea that Bitcoin mining threatens power supplies for residential and commercial uses is a farce. Power consumption by such entities is relatively constant in the context of supply and demand, meaning that energy prices in areas where residences and businesses congregate (i.e., cities and towns) are some of the highest in any sector. The main profit differentiator for Bitcoin mining is the cost of electricity, meaning that Bitcoin miners are highly disincentivized to operate in areas where direct competition by residential and commercial energy consumers leads to exorbitant energy prices.
The fact is that Bitcoin mining is driving revolutionary development and investment in energy infrastructure throughout the world, but especially in places where such infrastructure is in short supply. Just ask the state of Texas, where the influx of Bitcoin miners is building out the capabilities of an energy grid that catastrophically failed as recently as last year resulting in dozens of deaths.
The Truth is Publicly Available
Central Banks and the government bureaucrats running them are highly incentivized to hate Bitcoin and influence public sentiment against it. After all, their stranglehold control over financial markets for the past few centuries has earned immense wealth for them at the expense of everyone else.
Regardless of their misaligned incentives and attacks, the Bitcoin blockchain continues to operate, block after block, bringing financial inclusion and sovereignty to anyone who chooses to use it.
Like what you see, but not a subscriber yet?
Consider subscribing for:
đ§Two weekly emails on the topics of cryptocurrency and blockchain
đ°Subscriber giveaways for Bitcoin, Crypto Bestseller Books, Non-Fungible Tokens (NFTs), and more
đŁReal-time community discussions on the latest news within Crypto
Canât Get Enough Crypto In Your Life?
Consider joining my:
đ„Twitter. Where I share live news and thoughts about the goings on of the crypto-verse.
đžÂ Instagram. Where I share bytes of crypto knowledge about more topics than we can cover in a twice-weekly newsletter.
đFacebook. Where I share my latest content and engage the community on the worldâs biggest social network.
Support The HiFi Crypto Letters
Bitcoin is my passion and my mission is to give as many people as possible the chance to learn how it can change their lives for the better. If you feel like supporting that mission, a donation of any size is possible and greatly appreciated:
Blockchain Word of the Day
Learn more about cryptocurrency wallets by reading Square Inc.'s Foray into Bitcoin Hardware Wallets is a Sign of the Times
Want to learn more Blockchain words?
If you enjoyed the above article, please consider supporting me by providing a small tip at no cost to you and by subscribing to my free newsletter.
You can also take this 3-question survey to tell me how I can improve the newsletter for you.
This is not financial advice. This newsletter and related content are for informational purposes only. Cryptocurrencies, stocks, and similar assets can be risky. Always do your own research before making any sort of investment.
Â
