Could the government decide to make holding cryptocurrencies illegal?
So first – I get why people are asking this.
The thinking is that if the government feels threatened that its citizens are moving their money out of dollars and into cryptos instead, they'll just outlaw cryptos altogether so all that money will flow back to them.
Here's why I don't see that happening...
Bitcoin was built by computer geniuses as a form of digital money that would be unaffected by the whims and desires of politicians and regulators around the world.
And in order to shut down Bitcoin or just about any other cryptocurrency that I'd recommend... you'd have to shut down the ENTIRE INTERNET.
There's no First National Bank of Bitcoin to close. There's no Fort Knox of crypto to raid.
Cryptos were born online... they live on the internet... and they're mined all over the world.
Outlawing them would be the single most massive undertaking ANY government could ever try to take on right now. You'd need an army of cyber-cops working 24/7/365 to track down and confiscate all of the cryptocurrency out there online. (Remember there's over 5,000 of these digital coins right now... so good luck with that Uncle Sam!)
And let's pretend for a minute that the government DID shut down the internet... people have actually bought and sold Bitcoin without the internet. In fact, they've done it over HAM radio! So, not even that would work.
Not to mention there's at least one satellite orbiting in space right now that carries the entire Bitcoin blockchain. So, what? Is NASA going to fly up and shoot it out of the sky?
If you've ever heard the saying "the juice isn't worth the squeeze", it definitely applies here.
12 years ago, cryptocurrencies were created to avoid exactly this type of threat. That means any government that's going to try to ban them is already over a decade behind and trying to catch up.
I'm not saying that the crypto space is some lawless anarchy. But I believe what's far more likely to happen is that governments will find a way to regulate and profit off the rise of digital currencies... especially with the dollar losing more and more of its value every year.
Plus... starting a currency war with its own citizens would be HUGELY unpopular and likely never gain approval in Congress, where we already know members own Bitcoin themselves.
So, to answer the question: Could the government ban cryptos? Sure.
They could also add an extra day to the work week... or block out the sun... but the logistics behind such a move and the backlash that would probably result from it make it HIGHLY unlikely we see it happen.
It's just not realistic.