DeutschEven laypersons or those who don’t deal with the crypto market at all have certainly noticed the Bitcoin ban in China. China is not the first country in the world to enforce a ban on Bitcoin and the like. In this article, we want to introduce you to all the countries in which Bitcoin and other cryptocurrencies are banned.
What Counts as a Crypto Ban?
The countries that we present in this article have issued an absolute crypto ban. We generally distinguish between two types of bans.
- An absolute crypto ban exists when the state has declared all actions with cryptocurrencies as illegal.
- An implicit crypto ban exists when a country restricts the use of cryptocurrencies, for example. This is the case if the state does not allow cryptos to be used as a means of payment. However, the possession and trading of Bitcoin and the like would still be permitted.
Countries with Bitcoin Bans
Although Bitcoin has already been declared legal tender in El Salvador and the Central African Republic, there are unfortunately also states against Bitcoin. Practically every day there are reports from various countries that prophesy an imminent crypto ban. Fortunately, the situation is not that dramatic in reality. In this section, we will introduce you to countries with an official Bitcoin ban.
China
In China, cryptocurrencies have been completely banned since 2021. The impact on the crypto market was actually greater than in other countries. A large part of the Bitcoin mining centers had settled in China. The reason for this was the favorable conditions for the companies. As a result, the hash rate temporarily collapsed by more than half after the ban on mining centers. In the meantime, a redistribution of the mining centers has taken place, so that we have already seen new highs in mining.
Ever since Bitcoin was a topic in the public eye, reports of a crypto ban in China have surfaced. Ultimately, until 2021, they were nothing more than threats from the government or simply rumors.
In China, all crypto transactions are illegal. However, there is an exception for non-fungible tokens (NFTs), so companies like McDonalds China have already launched their own NFT collections. NFTs could be the key to the mainstream for blockchain technology.
In addition, Chinese authorities had announced that they wanted to further investigate blockchain technology themselves. This is also a point that shows how important the blockchain could be in future systems.
By the way: Despite the Bitcoin ban in China, according to initial estimates, around 20 percent of miners are still illegally on the road in China. The population can also continue to carry out crypto transactions illegally. Ultimately, the impact on the crypto market is of course still very large. More than 1.4 billion people live in China. The world’s most populous country cannot currently be part of a Bitcoin movement.
States in North Africa with Bitcoin Bans
Bitcoin has particularly great potential, especially in North Africa. Unfortunately, we now have to state that the following states have already issued a Bitcoin ban:
- Algeria
- Egypt
- Tunisia
- Morocco
Together, these states have more than 180 million inhabitants. In this case, the ban in Egypt is mainly based on Islamic grounds. In Tunisia, at least the voices calling for the decriminalization of Bitcoin became louder last year. Crypto enthusiasts are therefore increasingly switching to P2P platforms, as in Nigeria.
Other Countries with a Bitcoin Ban
Bitcoin is also still banned in Bangladesh, Iraq, Qatar and Oman. However, it is mainly evident that industrialized countries have not yet implemented any crypto bans. Therefore, we don’t have to worry in principle that we will have to expect a Bitcoin ban in Switzerland, Germany or the rest of the EU.
Why is Bitcoin Banned?
A very interesting question is why governments around the world are banning cryptocurrencies at all. First and foremost, many central banks and finance ministries warn of the risks associated with trading Bitcoin and other cryptocurrencies. This is justified by the high volatility. This is a point that certainly harbors dangers. However, one should bear in mind that every investment involves risks. A problem, however, is likely to be that many areas in the cryptocurrency sector are not yet comprehensively regulated.
The use of Bitcoin could also lead to less use of the domestic currency. Developing and emerging countries are already struggling with the consequences of high inflation. We speak of hyperinflation when the inflation rate is over 50 percent. The use of cryptocurrencies also entails a loss of control. States can no longer intervene in the accounts of the population via sanctions. This is of course a great advantage of cryptocurrencies, as they are neutral. However, remember that this neutrality can also be misused for worse things.
Another reason that could make bans a topic in the future is the environmental debate surrounding Bitcoin. In this case, this is because Bitcoin, as the largest cryptocurrency, relies on the proof-of-work consensus mechanism. This is a very energy-intensive consumption. The Bitcoin network requires more electricity than some small countries. This is of course an understandable point of criticism when we look at how important the eco-balance of many products has become for us. Here you have to bear in mind that many Bitcoin mining centers are already relying on renewable energies. In addition: What is a censorship-resistant, consistently available, free network for the transfer of values worth to us?
Conclusion: Can Bitcoin be Banned at all?
In theory, Bitcoin bans are quite possible. All states mentioned in this article have already implemented bans. However, it is almost impossible to stop blockchain technology from doing so. For example, users switch from crypto exchanges to OTC platforms or P2P marketplaces. In no country are cryptocurrencies as popular in relation to the population as in Nigeria. While crypto trading is banned in Nigeria, P2P marketplaces are booming. The mining example from China also shows that bans do not lead to the desired effect that the respective governments would hope for.
Countries like El Salvador are also pushing Bitcoin forward. As Bitcoin adoption increases, so does the pressure on states that have introduced a ban. After all, no state wants to miss out on technological progress.
A Bitcoin ban is still being discussed in countries like India. In the EU, at least a mining ban is regularly up for debate. It is not impossible that such bans will become a reality in the medium term. If we look at this from a long-term perspective, however, such bans should not last long. The number of users is currently very high compared to previous years, despite a very weak year in 2022. We do not currently see any reason for an end to this development.
