The central theses
- Bitcoin is arguably the world’s best example of a censorship-resistant monetary network.
- Recent world events such as Canada’s response to the Freedom Convoy and Russian sanctions have highlighted crypto’s role as censorship-resistant money.
- The crypto community needs to work to keep Bitcoin and innovations like DeFi permissionless and censorship-resistant.
Chris Williams talks about Bitcoin, DeFi and resistance to censorship in 2022.
Bitcoin as censorship-resistant money
In the cryptocurrency space, we spend a lot of time talking about censorship resistance. The number one blockchain, Bitcoin, is arguably the world’s best example of a censorship-resistant network. No one can turn off bitcoin because it runs on thousands of computers around the world. Nobody can stop you from sending bitcoin to any other address provided you have an internet connection and know how to create your own wallet. And as much as airport security doesn’t want to admit it, no one can stop you from carrying $1 billion worth of bitcoin to another country on a piece of paper if you happen to be a whale.
The development of the cryptocurrency space has brought new financial opportunities to millions of people. Besides Bitcoin, we now have all kinds of magic like flash loans and instant loans, innovations made possible thanks to Ethereum’s sprawling DeFi ecosystem. DeFi is also said to be permissionless, although issues such as dYdX’s compliance with US regulations and Wallet Blocks by MetaMask on selected users have discovered bugs in the system.
This year, the importance of censorship resistance in crypto has become a hot topic due to recent world events. In February, Canada’s Prime Minister Justin Trudeau sparked controversy when he threatened to freeze the assets of those who took part in protests over COVID-19 vaccine mandates. After a ban on the GoFundMe fundraiser, Canada went so far Target a handful of crypto wallets associated with the so-called “Freedom Convoy”, leading crypto enthusiasts like that of Kraken Jess Powell to denounce the government for its harsh treatment of dissenters.
A few weeks after the Freedom Convoy died down, Russian President Vladimir Putin ordered his forces to begin bombing Ukraine. In response, the West imposed a series of sanctions on Russia that plummeted the ruble and all but ensured the country’s economy would collapse. We saw companies like Netflix and Coca-Cola pull out of the country amid sanctions, while Russian athletes were banned from major sporting events.
Crypto quickly became part of the story when officials warned that Russians could turn to Bitcoin to evade sanctions. Ukraine’s Digital Transformation Minister Mykhailo Fedorov, who led the country’s crypto fundraising campaign, even called for an exchange to block Russian users, drawing criticism from many enthusiasts and top executives such as Brian Armstrong and Changpeng Zhao stand up for the defense of Russian citizens.
This week I was reminded of this topic at Binance announced that it would restrict services for Russian users with transactions over €10,000 to comply with EU sanctions. It’s the first exchange to announce such a move, but I’d be surprised if it were the last. After all, these are companies that aim to make money—Of course they will comply with the regulations. “Binance has given its word to the global community that we will implement all sanctions, and we will honor that commitment,” Zhao said called in a note on the subject. “World leaders must do whatever is necessary to end this brutal conflict and bring peace to the region for our users, employees and countless other members of the blockchain community.”
1/3 I feel the need to address our announcement yesterday regarding the EU’s new crypto sanctions. We believe that a crypto exchange should not have the power to unilaterally freeze an entire nation’s user accounts. And it must follow all sanction rules, old and new.
— CZ 🔶 Binance (@cz_binance) 22. April 2022
While little can stop exchanges and other centralized entities from complying with regulatory restrictions, I hope DeFi doesn’t fare the same way. Many people were shocked when MetaMask’s Infura accidentally blocked Venezuelan users and I believe we should work towards a future where anyone in the US, UK, Venezuela or Russia can borrow from Aave if they wish. Permission-free networks were created for this; we cannot simply settle for half a house of censorship resistance when it suits us.
All of this comes when the richest person in the world, Elon Musk, was very public Play 4D chess acquire a 100 percent stake in Twitter. Elon says he wants to bring back freedom of speech, which has angered some people who argue Twitter could become a podium for hate speech if left unmonitored. Crypto fans have been largely supportive of Elon, which is not surprising given that many share similar ideological leanings.
Whatever happens with the situation in Russia, DeFi of the future and social networks like Twitter, we can be sure that internet money will continue to be a powerful tool for financial inclusion (and who knows, maybe with that, Web3 Social will really take off). Even if the exchange follows unprecedented sanctions now, no one is going to stop Bitcoin any time soon.
I doubt anyone can stop Elon from doing that meme Neither does the internet, but that’s a whole other story.
Disclosure: At the time of writing this article, the author of this article owned DYDX, AAVE, ETH and several other cryptocurrencies.
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