What if the USA Banned Bitcoin?

If we have learned anything during the last three years in the world it is that we should expect the unexpected. Things seem to always become worse without an end in sight. When it comes to politics, most of our trust in “our representatives” has been lost. They can only be depended on following their own interests, or the interests of the donors that gave them large sums of money.

There is no area where this is more evident than when it comes to politicians' views on Bitcoin and crypto. Several politicians who ran for office declared that they are against large banks, that they are for the people, and want to do anything possible to finally allow the little guy to win. These same politicians are heavily against Bitcoin, crypto, and DeFi. Calling it a scam, that only criminals use it, it can’t be trusted, and calling it fake money.

In the crypto market, we must always be ready to adjust our strategy at a moment’s notice. But what if the worst situation played out?

What if the USA banned Bitcoin?

As I mentioned above, nothing in this world or the crypto industry should surprise you anymore. Most of us know that politicians can’t be trusted. We also know that powerful groups around the world are against Bitcoin becoming even more mainstream. That is why we have seen two years of constant FUD thrown toward Bitcoin and the crypto industry.

Do you remember when ESG FUD was thrown toward Bitcoin? When China not only banned Bitcoin but mining as well? When the US was going to sneak a bearish crypto bill into its infrastructure bill. The SEC constantly rejects Bitcoin spot ETFs. The SEC also sues any company that offers a crypto yield product. Going after Kraken and staking in the US. Declaring nearly all crypto outside of Bitcoin a security. The list goes on and on.

But there is one thing that should have alerted your senses more than anything. During the last few weeks, the US government has been accused of trying to “quietly ban” Bitcoin. Penalyzying banks who have large business with crypto companies in an attempt to cut off the on/off fiat ramps to Bitcoin. What they didn’t see coming is that this would cause a string of panic that would result in several bank runs that haven’t finished. Their plan to attack Bitcoin and crypto in the quiet clearly backfired. Bitcoin’s price has since rocketed up to $28k and people are waking up to what makes it so important and valuable. This is the reason why Bitcoin was created.

The government now seemingly has pie in its face and has been made a fool of. When a powerful enemy is desperate or embarrassed, there is no way to predict how they might react. And just maybe they might make a rash decision to try to bank Bitcoin.

The first thing that you must recognize is that this wouldn’t be the first time that the USA has made a drastic decision like this. They actually banned owning gold in 1934. This means perhaps they would try to use that as a precedent this time around. There is no denying that if the USA banned Bitcoin the price would initially drop drastically. It would possibly be the most bearish time in Bitcoin’s history. Seeing the price go below $5k wouldn’t only be a possibility, but very likely.

Now let me tell you why this won’t happen.

Back in 1934, the USA was still dealing with the Great Depression and was in a rough time financially. Let alone the War which was just about to ramp up. The USA’s dollar was not the world reserve currency and so they couldn’t print money like they could today. In order to re-inflate the country with money they seized gold at $20 per oz, and immediately re-valued it at $35 per oz. That was equivalent to how they are printing money today. However, today the USA is in a lucky position where the dollar is the world reserve currency, and they can just print more dollars. It lets America survive another day but also makes the use-case for Bitcoin even stronger.

Another problem that the USA would face is that Bitcoin and crypto are much, much, much more difficult to seize than gold. If stored properly, it is nearly impossible. So in order to seize the Bitcoin that isn’t in exchanges, the government would need to question citizens, threaten or torture them to give up their keys, and then seize it. This is a situation that likely wouldn’t fly.

However, let’s imagine for a moment that the USA did bank Bitcoin, and they also seized it from everyone that they could. What would happen next?

If that situation were to play out, Bitcoin would move to the black market where its demand and price would skyrocket. People’s eyes everywhere would have awoken to what the government did. In a sense, they would have woken up a sleeping giant. Similar to how drugs cost extreme prices because they are both illegal and hard to find. The same would happen to Bitcoin. There would be a secret group of people who would continue to rebel and hold it. This has actually already happened in some places in Africa where the country outlawed Bitcoin. The end result was that the demand for Bitcoin only increased.

Eventually, Bitcoin would either become popular enough that there would be no denying that it is the money of people’s choice. It would overtake any other currency. Or, the US government would have won the battle, but lost the war. It would be a huge mishap that they would never be able to rightfully explain. The people would see it and would have awoken to how things are really happening. Bitcoin in its current or future form is like toothpaste that has been let out of the tube, the idea has been let out and there is no putting it back in.

How about you? What do you think would happen if the USA banned Bitcoin?

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