Let’s talk about the weak links the government can exploit if they want to fully clamp down on cryptocurrencies and it’s adoption around the world. Bitcoin remains undoubtedly the most secure network in the world, it literarily exists on the internet, meaning the internet itself will have to be globally shut down to shut down the entire Bitcoin network which is already too late for any government to do because internet hosted in Space is already being developed, remember Starlink?
But based on the programmatic nature of other cryptocurrencies, majority have to sacrifice this extent of security for applicability which in turn subjects them to several layers of vulnerabilities and an easy target for entities like the government to mess with by trying to shut them down. It’s been over 4months since the Nigerian CBN banned banks from offering crypto related financial services to customers.
Banks
Banks are the weakest links, because they are mercenaries for the Central Bank and unfortunately most people rely on them for conducting their financial operations. Bitcoin was designed under a standard of Peer-to-Peer transactional system, this eliminates the dependency on the banks which is why most of them are salty when they hear about cryptocurrencies.
Since the government banned banks in Nigeria from offering financial services related to cryptocurrencies, the rate of Bitcoin P2P transactions in Nigeria has gone through the roof, making it the largest in Africa.
Centralized Exchanges
Next to the banks in levels of vulnerability is the Centralized Exchanges(Cex’s), when it comes to the variety of coins we have, exchanges are best at facilitating our trades, however, we’ve seen how governments can mess with exchanges and make trading activities inaccessible by putting up laws that restrict their operations within their jurisdiction, a typical example is Binance in U.S. People living in the U.S cannot access trading activities on the Binance exchange platform.
Other examples of measures the government put in place that stifles the growth of Cex’s are strict invasive kyc laws that gets worse by the day, even though there are other options that make signing up easier, it only takes a well coordinated clamp down on them to render all of them inaccessible! This is why the need for fully decentralized exchanges cannot be over stated, decentralized exchanges that can facilitate cross chain atomic swaps.
I cannot undermine the works being put into building these centralized exchanges, some of them have earned their respect but it would make a lot more sense if all that energy was directed at building decentralized exchanges. Moreover, “not your keys not your crypto”, an exchange can decide to collude with the government to seize customer funds or sell personal information.
This is why I’m rooting for Thorchain, they’ve got the ball rolling, just what crypto needs, the employed incentivized decentralized peer to pool system is the best approach to tackle the problem of instant liquidity in an AMM system, although the system is still in its early development stages, it can only get better with more time and code.
Centralized Wallets
Just like CEX’s, centralized wallets are custodial, meaning users are not in full custody of their funds, they also face similar threat of being controlled and users face the risk of losing their funds should the centralized entities in charge of the platform become compromised. Decentralized non custodial wallets and hardware wallets are best suited for storing cryptos, one is always in full custody of funds and access to it.
Trust wallet is an example of decentralized wallet, the user is in custody of funds by having the sole access to the private keys that is required to get into the wallet.
Digital Service Distributors
Crypto applications that rely on digital distribution services like Play Store and App Store for their existence are under the threat of being deplatformed by their distributors. Although this risk is quite low compared to the others, but I always like to think that if something can happen, the chances of it happening and not happening is 50/50, no guarantees. The remedy to hosting applications on centralized market places is to build the apps on the Blockchain, so that they become dApps, so even when they are deplatformed they can still be accessed through the web interface.
For example, Splinterlands is built on Hive, if the application is being blocked/banned on playstore, the web version can still be accessed on the web as all the data are being stored on the decentralized web (Hive). So to attack Splinterlands, you’d need to attack Hive, and to kill Hive you’d need to kill every node running the Blockchain software in the world.
Web hosting services
Which brings us to the last one, Web services, a lot of crypto applications rely a lot on blockchains that rely a lot on web hosting services....that are centralized, for example Amazon web services AWS. In the extreme case of clamping down on crypto, if the government somehow blocks off access to AWS, many cryptos are going down due to the complexity in their applicability that makes AWS best suited for them.
Ethereum scales here because it offers a decentralized version of AWS where the cloud services are provided by pooling computing resources from computers owned by anybody participating in the network from anywhere in the world, though some people claim that Ethereum is costly and slow, some will willingly sacrifice cost and speed for its level of decentralization.
There have been other alternatives to Ethereum to enter the sphere recently, offering more speed with cheaper transactions but with lesser levels of decentralization and other dedicated primary functionalities.
As far as I’m concerned, for every weak link, there is already a best fit solution on the Blockchain, the government should have killed Bitcoin as it launched because now they will be fighting an already lost battle if they begin to clamp down on cryptocurrencies. We already see it happening, Bitcoin mining was banned in China but is growing in other places. Like a hydra, you cut the head off and it grows somewhere else.
Crypto is the new world order the world doesn’t just know it yet, and we will need those applications that are decentralized at their core to realize that fact, everyone of them, because if the governments begin the clamp down they will exploit all the options in this post you can bet on that. To be forewarned is to be forearmed. Stay informed.
Thanks for reading.