2021 has been quite generous to crypto so far. We have had some of the biggest companies out there investing in bitcoin. We also have a candidate for the U. S. (SEC) chairman who is knowledgeable about what blockchain is.
The best part of all of this is that we are just getting started. The crypto community continues to grow. It seems it is growing faster than market capitalization has grown.
But while everything looks nice in a bull market, crypto may have a huge monster breathing down its neck in terms of a ban on crypto? And according to American investor and billionaire Ray Dalio, it is more plausible than you think.
A HISTORY OF PROHIBITION
Ray Dalio knows a thing or two. That’s why he’s a billionaire, right? Well, in January, he claimed bitcoin was one hell of an invention. Now, a few months later, his opinion had changed. He’s now comparing bitcoin to gold. And contrary to popular belief, this is not a good sign.
On March 24, Dalio had an appearance on Influencers, a Yahoo Finance show. There he compared the current state of bitcoin to that of gold coins in the 1930s.
During the Great Depression, having cash or bonds was a bad idea. Thus, people began to take shelter in gold. It reached a point where it was common to pay with gold coins. The result was obvious — the dollar lost its value.
Franklin Roosevelt, president at the time, signed the “Gold Reserve Act” in 1933. This prohibited the hoarding of gold coins, certificates, and bullion on U.S. territory.
And, as expected, the response to this move was the opposite. People started trying to buy a lot more gold — all of which made the dollar lose its power. The government’s response was to try to keep gold out of the hands of Americans.
The government’s plan was basically to create a monopoly that would allow them to maintain or increase the value of the dollar.
BITCOIN V GOLD: A WORTH NOTING METAPHOR
With this mini-history lesson comes an almost obvious parallel between the 1930s and today. The U.S. government chose to boost the value of the dollar to cope with the results of the pandemic.
This time, similar to the 1930s, money flowed into other financial instruments. Bitcoin was the choice of many Americans for 2020.
Dalio made the comparison here. His logic was that if it happened to gold, it could easily happen to bitcoin. The government could try to ban bitcoin if things become haphazard for them.
At the end of the day a man as prepared as a billionaire does not say things without an argument to support them.
This time, India was the example. Recently the Indian government hinted that it plans to ban cryptocurrencies. India repeatedly has tried to do something against crypto in recent years.
DECENTRALIZATION CAN’T BE BANNED
While it is true the Indian government doesn’t like crypto, having only one example is unfair. Dalio uses a single example to confirm his claim is what is known as confirmation bias.
Take for example the case of Nigeria? The government has strongly opposed the use of cryptocurrencies and tried a couple of things to ban it. The response of the people was to use it even more while the Nigerian naira continued to plunge.
There was so much commotion that the government itself had to rectify its story by saying that they did not ban crypto. Honestly, this is likely what will happen in India, too.
Needless to say, many opposed Dalio’s opinion. Among them, Tyler Winklevoss, founder of Gemini. Winklevoss said on his Twitter that the time to ban bitcoin has long passed and the government would never try to do so.
A FINAL WORD
Today, the government may know who uses bitcoin. Now, is there a collective effort between banks and governments to ban bitcoin? I don’t think so.
In the worst case scenario, there may be a kind of ban against exchanges. Yet, let’s remember one of the mottos of crypto space: “Not your keys, not your coins.” Even if exchanges close, nobody can confiscate your bitcoin — that is if you maintain control over your money.