Yesterday, the president of Russia, Vladimir Putin, stated that no one can ban cryptocurrencies.
To be precise, to the question “who can ban Bitcoin” he answered “No one”.
Then he added that no one can even ban other electronic payment systems.
Summary
Putin’s idea on cryptocurrencies
In reality, electronic payment systems can be banned if they are centralized, even if it is necessary to block them one by one.
But if they are decentralized, in today’s world they are indeed unstoppable, unless you turn off the Internet.
Putin did not explain this detail, but only said that they cannot be banned because they are new technologies. On the other hand, their uncensorability comes precisely from being based on the new technology of P2P and decentralized open source computer protocols.
The president of Russia then also specified that it is not important what happens to the US dollar, or to other fiat currencies, because the technology of cryptocurrencies will continue to be developed and used.
According to Putin, the advantage lies in the low transaction costs and the high reliability.
In reality, the cost of transactions, for example in Bitcoin and Ethereum on layer-1 is not that low, but in fact, just using layer-2 allows for extremely low costs, and in any case, compared to the cost of classic transnational transactions, they are still very economical.
Russia and the crypto
The relationship between Russia and cryptocurrencies has been very troubled.
It should be remembered that when Bitcoin was born in 2009, Putin had already been the president of Russia for nine years, even though technically from 2008 to 2012 he was prime minister during the Medvedev presidency.
Initially, Putin’s Russia did not oppose cryptocurrencies, also because thanks to the abundance of fossil hydrocarbons, mining could be done at relatively low costs.
At a later time, however, Russia became much more critical of crypto, to the point of trying to ban them.
In fact, in 2021 the Russian central bank tried to ban them, but without success.
Then, after the start of the war against Ukraine, the position became much less critical, perhaps also because thanks to cryptocurrencies, sanctions can be circumvented. And so between 2023 and 2024, Russia in fact legalized cryptocurrencies and accepted them, although placing some limitations on mining.
As of today, Russia is the fifth country in the world in Bitcoin mining, with 4.6% of the global hashrate. It is far from the 38% of the USA and the 21% of China, while it is not far from the 6.5% of Canada or the 13% of Kazakhstan.
The Chinese case
China itself is the most emblematic case of an authoritarian state that has tried to ban cryptocurrencies.
It has done so since 2017, with several subsequent bans, the most famous of which in May 2021 caused the price of Bitcoin to crash from $60,000 to $30,000.
In fact, that year China managed to eliminate crypto mining within its territory, only to discover the following year that some Chinese had resumed mining illegally.
Despite all the efforts made by a country accustomed to controlling the actions of its citizens, in the end, they simply had to accept that someone was mining BTC even there, because probably the costs of fighting mining were much higher than the benefits they were obtaining.
In fact, despite there still being an outright ban on the buying and selling of cryptocurrencies in the country, many Chinese people purchase them using foreign exchanges.
If in the second half of 2021 Chinese capital was missing from the crypto markets, so much so that the price of BTC was unable to reach $100,000 and stopped just below $70,000, now they are present, and it is also for this reason that the price of Bitcoin has managed to rise above $100,000.
This Chinese case demonstrates that most likely Putin is right when he says that in practice no one can truly ban Bitcoin, because nowadays anyone with Internet access can use it freely in fact.
