Another Crypto Ban, Another Irrelevant Narrative
In today’s Money Morning…as you’d expect, that sent a lot of the media into a frenzy…underhanded agendas…controlling the narrative…and more…
It looks like Russia is the latest nation to ‘ban’ crypto…
The local central bank is proposing a halt on not only the use of Bitcoin [BTC] and other cryptocurrencies, but also mining for said token. It’s a move that will bring it in line with China and a handful of other nations aiming to stop the uptake of crypto.
As you’d expect, that sent a lot of the media into a frenzy — paving the way for more FUD opinions from hack journalists.
After all, this ban isn’t about stopping crypto because it is bad. No, the reason Russia is trying to crack down on it is because it is too good at undermining their corruption.
Because if the Russians truly had a disdain for the blockchain, they wouldn’t still be committed to developing a digital rouble. A move that, like the digital yuan, will no doubt be largely about enforcing further control over the local population.
All of which, rather ironically, continues to prove why bitcoin is so important.
It is a tool designed to tear down centralised power structures.
According to some reports that I’ve seen, this ban may even be entirely political in nature. A move designed to stamp out the ability of Russia’s political opponents to fight against Putin’s rule.
As Bloomberg reports:
‘The central bank’s hard line against crypto dovetails with the position of Russia’s powerful security services, which also back a complete ban domestically to prevent it from being used to fund the country’s opposition, according to two people familiar with the issue.
‘The Federal Security Service, or FSB, lobbied Governor Elvira Nabiullina for a blanket ban as the hard-to-trace payments are increasingly used by Russians to donate to undesirable organizations, including media resources that have been labeled “foreign agents,” said the people, who asked not to be identified because the information is not public.’
So, as I said, this ban looks to be mostly about control than anything else — something that should’t really come as much of a surprise given how the Kremlin operates.
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What does that mean for crypto investors though?
Could this move end up hurting the wider adoption of crypto?
No, probably not.
Because as we’ve seen in China, despite pushing miners to other locations, local investors are still present. They just simply have to rely on trading on international platforms rather than local ones.
That’s the beauty of crypto. It is a global trend that is often heavily intertwined with privacy agenda. Meaning that with a few workarounds, people living in countries with crypto bans can still get around these restrictions.
And that, dear reader, is why this latest ban by Russia isn’t going to matter all that much. Hell, even the price of bitcoin has barely budged upon the release of this news.
Which is why I want to finish today’s article by sharing with you something that I recently wrote for our premium crypto service subscribers. A message that every crypto investor needs to remember…
Controlling the narrative
‘Take Bitcoin [BTC] mining bans, for example. A topic that has garnered quite a lot of attention last year after China — which dominated this sector — clamped down hard on miners.
‘From May to July, the entire bitcoin network more than halved in productivity, largely due to this ban. It was a move that seemed like it could be a real blow for achieving the kind of scale that bitcoin needs for wider adoption.
‘That seemingly got the ball rolling for more bans from more governments, most of which were relatively small and insignificant to begin with, but meant more bans, nonetheless.
‘And all this seemingly came to a head to the point that Fortune decided to post the following article:
“Bitcoin mining is being banned in countries across the globe — and threatening the future of crypto”
‘Published on 6 January, Fortune clearly isn’t hopeful for the outlook of bitcoin and crypto. They’re suggesting that these bans could be the beginning of the end for this financial revolution…
‘As you can probably guess, that is total nonsense.
‘Kosovo, the latest nation in question to ban mining, is not the straw that will break the camel’s back. Because if crypto miners survived the China ban — which they have — then they’re unlikely to disappear anytime soon.
‘Rather than deal in speculation, though, like Fortune has, let’s look at the data:
‘This graph shows you the total hash rate (terahashes per second) on the bitcoin blockchain — a metric that measures how often miners are ‘hashing’ data in order to verify transactions.
‘The higher the hash rate, the more productive and secure the network should be.
‘In reality, it’s not quite that simple, but the point stands for the most part.
‘So Fortune’s claim that mining bans are “threatening the future” of crypto is just not true. Sure, the ban in China was pretty impactful in mid-2021. Now, though, that deficit has been recovered as miners find new, more welcoming, locations.
‘All of which comes back to my original point: the narrative is very different to reality.’
Until next week.
Editor, Money Morning
PS: Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.