Topic: What if governments make Bitcoin centralized? (Read 1084 times)

It's a good point. But what if governments control a large portion of Bitcoin's circulating supply? Then it wouldn't be called "decentralized" anymore. With a limited supply of just 21 million coins, it's easy enough for governments to hoard most of the coins across exchanges for complete control of the Blockchain. Of course, miners are the ones who're in-charge of the network's consensus. But the concentration of Bitcoin's supply on the hands of the government will only cause unnecessary conflicts in the long run. Things would've been different if Bitcoin were an inflationary cryptocurrency like Dogecoin.

At least the code is open source, so it's easy enough for the community to create a new coin in case Bitcoin becomes compromised. As long as decentralization is prioritized, Bitcoin will last a lifetime. Just my thoughts

I do not think any government will be able to make bitcoin centralized as it is based on block chain technology. That is the prime reason bitcoin will maintain its transparency. 

I remembered one thing that one of the people in my country governance said that Bitcoin will not be a legal tender or a currency in our country, the reason is because: they cannot control Bitcoin, Bitcoin cannot be centralized. Even they may be possible, the ways are too complex and complicated so that they will prefer not to control Bitcoin.
Maybe this reason also becomes the reasons here, Bitcoin will never be centralized, who will control? Who will make it centralized? Under world bank? FBI or who?
that is why Bitcoin is still decentralized.

It is impossible for the government to make Bitcoin centralized, because it is impossible for the government to control all Bitcoin transactions  on
the internet. Therefore, if there is a country that prohibits the use of Bitcoin, that country cannot prevent its residents from using Bitcoin.
I have a friend who lives in a country where Bitcoin is banned, but my friend can still own and use Bitcoin. That proves Bitcoin is decentralized,
this is what makes Bitcoin able to give users the freedom to manage their own finances without a third party. The government can only regulate
exchanges by requiring KYC, while not all exchanges require KYC procedures, although I know nowadays most of the exchanges enforce KYC.
Then we can make Bitcoin transactions without going through exchanges. That's why I said it was impossible for the government to make
Bitcoin centralized.

Exactly. Forcing KYC through centralized exchanges only makes matters worse, as governments will be able to track and trace crypto users with ease. It completely defeats the purpose of crypto/Blockchain tech (which is eliminating the middleman or third-parties from the system). Some would say that you can always use decentralized exchanges to get access to Bitcoin and other cryptocurrencies, but their lack of liquidity/trading volume makes people look elsewhere. Not to mention, most DEXs require a certain level of technical knowledge to be able to use them properly. Centralized exchanges have a better user experience, so people will choose them even if they have to give their identities in return.

Sadly, Bitcoin's supply is largely controlled by big players on the market, effectively turning into an "unequal" cryptocurrency. Governments can easily take control of centralized exchanges in order to grab a huge portion of Bitcoin's supply. And don't get me started on controlling mining companies like Bitmain, Canaan, etc. It'll be up to the community to help prevent Bitcoin from becoming a full-fledged centralized cryptocurrency. As long as decentralization and censorship-resistance is prioritized, there should be nothing to worry about. Just my opinion

Governments can only make more regulations and laws on how exchanges can operate like KYC requirements and etc.They cannot directly control bitcoin blockchain and even if they try to control bitcoins by 51% attack, the mining power needed to compete with the network would require enormous amount of money to acquire mining hardware capable of doing this 51% attack.

I never think that Bitcoin can be made centralized. Bitcoin is decentralized.
Although when we are using Bitcoin, trading it on exchanges and other activuties rekated in Bitcoin, we need to do through the centralized exchanges and others, it doesn't mean that the Bitcoin centralized, does it?
How can we exactly track the Bitcoin from one wallet and others? Moreover centralized relates to controled systems. How do the governments will take the full controls of al transactions in the world wide of Bitcoin?

Laughing out loud, good thing your topic clearly says "What if "
This cannot happen, a government that gets nothing completely from.bitcoin.
For a government that wants the rich to be richer ? Poor to remain poor ?
They will never accept it with much consideration and policies.

If the governments do look in that direction, Bitcoin may gain even more trust. It would lead to growth and adoption of Bitcoin and other cryptos beyond current limits.

Maybe the only way is to add a third party system that will be used to facilitate every transaction that will happen around the jurisdiction

area of certain country or government who wanted to have central access within Bitcoin system.

I don't have any idea if that's possible or how things may work if the government will pursue with this kind of plan, but Bitcoin itself it's been

created as decentralized, it will work from how it's originally intend being used.

OP,
Governments getting involved in Bitcoin does not make it centralized. I'm totally for governments getting involved with Bitcoin mining - I really hope they do! Bitcoin mining has huge potential to help move the world toward a green energy future and that'll happen much more quickly if governments get involved with mining. I wrote an article earlier this year on Medium talking about how US States should all be involved in Bitcoin mining.

Governments joining Bitcoin doesn't mean it becomes centralized because nothing about Bitcoin changes based on who is involved. Just as it is not bad that companies now take part in bitcoin mining there is nothing bad if governments take part in it too. It would make sense for governments to get involved in the future global currency. Bitcoin is for the world, not just for hobbyists or the poor or the rich or people from first world countries or people from third world countries or for companies or for governments or whatever else. Bitcoin is for all of those things - for everyone. There is nothing bad about more people or institutions adopting and taking part in Bitcoin. All it does is increase Bitcoin's decentralization and increase its presence and importance in civilization.


I always find it odd when people say they don't like rich people or companies or governments or whatever buying bitcoin or doing anything with bitcoin. The power of Bitcoin is that it is free to use by anyone. Wanting Bitcoin to be limited goes against the idea of Bitcoin.

Certainly bitcoin is going to become more and more centralized each new day through new and more strict regulations. I just don't see governments attempting to stop bitcoin by controlling 51% of the mining hashrate or confiscating the supply disponible in the market as it was mentioned in another posts.

But thinking about this matter right now while I'm writting this post, it came to my mind governments could create a regulation to forbid exchanges from operating during determined periods of time, just like traditional markets do to avoid high volatility and price devaluation of the assets. For an example: if bitcoin falls 5%, exchanges must stop all the orders until the next day.

About Melania's NFTs it's a quite curious situation, because Trump has criticized bitcoin as a menace to fiat system some time ago and told the media he was a full supporter of dollar currency, but now his wife's NFTs can be bought with Solana crypto currency...

IMO government already has made BTC a bit centralized through KYC based centralized exchanges like Binance. Melania Trump has recently launched her own painting as NFT, this shows that top officials have faith in BTC but when they are in power they cant support crypto because of government policy.

I believe governments are not going to try stopping bitcoin, because there are many influent businessesmen investing in bitcoin who are also partners of these governments and there are public agents too, who may invest in bitcoin secretly. So it's not interesting for authorities to embarass the matters of their friends. If they do this, there will be retaliation and these businessmen will take their money and leave the countries where governments acted against their personal interests. It means loss of investments for governments, what isn't positive for their maintenance in power and for the development of the country.

if the government makes bitcoin centralized then the scenario that will happen is that people will not see bitcoin as a "precious treasure" anymore

government makes everything stable then it stabilizes is bad for bitcoin

uncontrollable, unstable and also can not be monopolized is the main goal of the creation of bitcoin, and it was satoshi's wish that wanted to improve the world

The future outlook for bitcoin is the subject of much debate. While the financial media is proliferated by so-called crypto-evangelists, Harvard University Professor of Economics and Public Policy Kenneth Rogoff suggests that the “overwhelming sentiment” among crypto advocates is that the total “market capitalisation of cryptocurrencies could explode over the next five years, rising to $5-10 [trillion].”8

You are right, a government cannot have control of BTC, the efforts they make will be in vain because the majority of Strong Hands would not allow the millionaire market to fall into those hands, neither of the banks, it is practically impossible for that to happen, BTC lives on supply and demand and obviously there are whales and institutions that did not buy to lose money, if we take this into account, they are capable of waiting 8 to 10 years to sell their BTC and this waiting for BTC to reach the $ 100k which is very possible to happen.

The government allowing Bitcoin to replace fiat is unlikely. If Bitcoin is allowed as a transaction tool it is possible but if it replaces fiat it is not possible. Bitcoin and fiat can be run side by side. There are still many people who are less responsive to technology, therefore they will definitely be much more comfortable using fiat in transactions. The government will also not get out of hand from fiat, especially Bitcoin cannot be controlled by the government so the government must as much as possible maintain fiat so as not to be eliminated by Bitcoin.

Even if the government would want to make cryptocurrency especially bitcoin a centralized platform I am also thinking about how would a government would make it? I mean we all knew that cryptocurrency is a decentralized platform and that is also the reason why most of governments would not want to make cryptocurrency become a legal tender in their respective country. So I am thinking that the thought of what if governments make bitcoin centralized is impossible.

USD Coin is NOT issued by the US government, but rather a private company with its own interests. While controlling Bitcoin is highly unlikely to happen, there's always the risk of failure. We should be prepared for the worst, as governments and central banks do everything in their power to put an end to Bitcoin and Blockchain technology. The greater the hashrate, the harder it'll be for governments to successfully perform a 51% attack on the Blockchain.

What governments might do is control a large portion of Bitcoin's circulating supply, by manipulating centralized exchanges to their own will. But coins are largely distributed worldwide, so the chances of this happening are very slim. Take into account lost and/or stolen Bitcoins, and you'll see what I'm talking about. As long as Bitcoin remains decentralized and censorship-resistant, it'll last a lifetime. Just my thoughts