For many newcomers to bitcoin and outside observers this may seem asinine but to many that hold bitcoin and know bitcoin in and out the assertion of the title makes complete sense. Much of the confusion for newcomers and outside observers come from their overestimation of government capabilities, not understanding the architecture of bitcoin, and not understanding the impetus for creating, sustaining, and growing the bitcoin network.
One word that describes the deliberate design of bitcoin would be Nassim Taleb’s coining(pun intended) of the term: Anti-fragile. Taleb was able to give an English word to a concept that has been well known for centuries but for modern people who are very pain and risk averse the idea of anti-fragility has become somewhat of a foreign concept. In essence fragile things need protection and hate disorder like a glass cup, robust things don’t really change no matter what happens(gold), and antifragile things get stronger with disorder, pain, etc(bitcoin). A canonical example of anti-fragility would be the mythological creature, Hydra. When Hydra’s head was cut off, according to Greek legend, Hydra would not die but instead many more heads would grow. A minor set-back that is turned into a 10x type gain.
This sentiment of anti-fragility is mirrored in Nietzsche’s famous statement “That which does not kill us makes us stronger” and Kelly Clarkson’s hit single “Stronger(What Doesn’t Kill You)”
Bitcoin is architected to be anti-fragile and its history is a testament to this concept reinvigorated by Taleb.
Bitcoin was created explicitly to be outside of the legal and financial structure created by governments and banks. With its clever use of cryptography(mathematics) and distributed systems(decentralization), bitcoin was the start of an entirely new anti-fragile financial system. It’s literally impossible to stamp out human knowledge of mathematics and I would say it’s not far fetched to say it’s extremely difficult to monitor and physically enforce every physical space on planet earth where bitcoin transactions and bitcoin operations could take place. If the latter was even tried, bitcoin being shut down would be the least of our worries. And now that bitcoin has spawned hundreds of these cryptocurrency copy-cat projects, the possibility of any government let alone the Chinese government killing these networks is close to zero. Bitcoin was birthed out of years of amazing work by cypherpunks committed to human freedom and it isn’t going away by any institution’s choosing. As long as human beings want it, the bitcoin network will run.
For many in the cryptocurrency space this is a “bring it on” moment because one of the main features of bitcoin is financial censorship resistance and many of the most passionate in the space would love nothing more than someone to put that to the test.
No transaction on the bitcoin network can be stopped by any institution in the world no matter how much faith people may have in it that particular institution’s power. It hasn’t happened yet or you would expect bitcoin donations to Wikileaks to be censored by angry institutions all over the world. It hasn’t happened and it won’t happen because it can’t. The bitcoin network is only limited by the physical limits in nature which governments themselves are subject to.
Given the reaction of price movements, worried newcomers, and the press you’d expect China to have completely stamped out bitcoin from their country. Unfortunately for the overly sensational press and bitcoin naysayers the only set-back for bitcoin in China was the shutting down of major exchanges. It is true these exchanges do have a large amount of volume traded everyday but like many goods that are desired by regular people, huge black markets will emerge and technological improvements to decentralized exchanges and peer to peer exchanges will emerge even more forcefully than they already have. Necessity as they say is the mother of all invention.
You can think of the shutting down of these exchanges as a small ‘bug’ that makes you a little sick or sniffly for a few hours but your immune system is strong enough by now to quickly take care of the bug and become stronger by building additional defenses against it. There is nothing to be freaked out about or worried about for those that are new to bitcoin.
To add complexity and context to this move by China, a significant amount of hashing power(bitcoin mining) is in China. To date bitcoin mining in China has had no active threat issued by any Chinese authorities. Even if Chinese mining operations were to be shut down like what has just happened to centralized exchanges it would be a short term set-back for bitcoin but would create a huge incentive for black market operations and other places around the world to pick up the hashing power China was once providing at a competitive advantage. This hypothetical banning of mining could happen, its not impossible but again this would usher in a new type of immunity for bitcoin, probably forcing it to be even more decentralized than it already is. Onwards and upwards.
One can not help but think how much income bitcoin mining creates for people high up in Chinese society and how much of a long term strategic asset bitcoin mining is to China. Given its distaste for the US dollar based monetary system and its comparative competitive advantage in bitcoin mining it would be highly irrational to shut it down. Whether they do mine or don’t mine bitcoin, bitcoin itself and the users of the network could care less. The network will work as designed. China can either benefit or shoot itself in the foot. Bitcoin could care less which it chooses.
If history is any good indicator, if China bans something it’s probably useful technology and is going to be a huge success. The list is long: Youtube, Google, Uber, Facebook, Twitter, and probably more I don’t know about. Despite their successes in other parts of the world all of the aforementioned companies are successfully banned because of their nature as centralized business platforms. Bitcoin is explicitly decentralized and not a business in anyway so even if they banned bitcoin, it would be like banning language or oxygen. There is literally nothing they can do to stop peer to peer transactions facilitated by a distributed network of computers all over the globe. They are completely powerless. They may be able to shut down centralized bitcoin related companies in their limited geographical jurisdiction but they can’t stop bitcoin. I would suspect they know this and soon more people on the sidelines will realize this.
The public and the press will soon find out how little this move matters to bitcoin’s prospects and actually highlights its core feature of being an uncensorable financial network.
What doesn’t kill it, only makes bitcoin stronger. This little bug just made the entire ecosystem a whole lot stronger.