The Power of The Forbidden: Can a Full Ban of Privacy Coins Actually Be Beneficial For Them?
One question that is increasingly discussed nowadays is: what happens when the government and regulators increase their pressure on privacy coins and PriFi solutions in general, possibly resulting in a full ban?
Wouldn’t they die out? If they are made ‘illegal’ to use and to own, and they are being banned from centralized exchanges, nobody would dare to use them, right?
Exactly this question and its answer is the topic of this article. While I recently already covered the question of what is needed in order to counter the pressure when it comes to privacy coin delistings on centralized exchanges, this topic right here is a bit more fundamental.
I want to ask other questions:
Could a ban of privacy coins actually benefit them?
A lot of things that are banned or forbidden by the government experience hype among citizens, or do they not?
Is there a scientific explanation for this phenomenon?
Tl;dr: It is possible that a ban on privacy coins and PriFi solutions could lead to increased interest in and adoption of these types of cryptocurrencies. Yes, you read this right. The reason for this is simple: Such measures could be perceived as a form of censorship or government overreach.
This phenomenon, known as the "Streisand Effect", occurs when attempts to censor or hide information have the unintended consequence of publicizing the information more widely.
‘Streisand Effect’: What it is, how it works
The phenomenon of the Streisand Effect refers to any attempt to hide or censor information, with the unintended consequence that exactly this information will be spread wide and far. The term came into existence through Mike Masnick (CEO Techdirt) when he wrote an article in 2003 about an incident that involved the popstar and actress Barbara Streisand.
Streisand filed a lawsuit against a photographer who took an aerial photograph of her property in Malibu, California. He published it together with thousands of other pictures on a website; the purpose was not to show prominent figures’ properties, no. The pictures posted had to do with coastal erosion in California, which was depicted in all those photos, including the one of Barbara Streisand’s property.
Streisand sued the photographer; however, at this point, the photograph had barely been seen by anyone. This changed quickly: The new attention due to the legal action led to hundreds of thousands of views. Thus, the term ‘Streisand Effect’ was created -by trying to censor information, you will get, in a lot of cases, not the result you hoped for.
The phenomenon is based on the principle of reactance, a psychological theory from the 20th century: If people feel that you are censoring information, when they feel their very own freedom is affected or even threatened, they will resist. They will try to reclaim this very freedom.
Remember when you were a kid and your parents told you to not do this, not do that…
What did you do?!
The Streisand Effect In Action
In history, we find a lot of examples in which this effect led to converse results after certain instances of government overreach. When reading about them, as I am sure you already have in the past, you will quickly understand where we are going…
Prohibition era in the United States: In 1920, the U.S. Government banned the sale of alcohol. In the following years, this ban led to the rise of illegal production and the black market on which alcohol was sold. But not just that, even the alcohol demand itself went up. Suddenly, people who never drank alcohol before were looking to get their hands on this (now forbidden) product.
The war on drugs: A similar case is the war on drugs which has been happening for decades worldwide, but especially in the Americas. Same as in the prohibition era, the illegal drug trade was born through hard restrictions on such substances. The black market that was created due to it is nowadays out of control, claiming thousands of lives.
File Sharing: A more modern example of the Streisand Effect is Napster. Napster was the first prominent File-Sharing service that enabled people worldwide to download music protected by copyright, via a peer-to-peer network. In 2001, it was shut down by a court order. The result? You guessed right: Several other P2P-platforms took its place, including Limewire, eMule, and BitTorrent.
China and their firewall: In communist China, access to free information is not necessarily the favorite of the ruling Communist Party. What is known as ‘The Great Firewall Of China’, a euphemism for rigid censorship of social networks and search engines, led to the usage of virtual private networks (VPNs) among the citizens. With the help of VPNs, Chinese citizens are still able to access blocked websites and content that was censored by government restrictions.
And now, ask yourself: What could possibly happen when governments worldwide suddenly make privacy coins illegal?
The Streisand Effect & A Potential Ban On Privacy Coins
So how does the Streisand Effect apply to privacy coins and PriFi solutions? If governments declare the usage, including buying/selling and ownership, of privacy-related coins and tokens as illegal, this will probably lead to more media coverage, an increased interest among the general public, and thus, an increased adoption of those privacy solutions.
The adoption would be accelerated, not slowed down or even shut down. It would be seen as government overreach, as a form of censorship, and an unnecessary measure against a fundamental human right.
Even people who had never heard about Monero (XMR) & Co. before could be compelled to research those now-forbidden tools, only to realize that they are actually really useful. They might use it just out of protest, as an act of rebellion, or simply because they finally realize that they actually need privacy coins.
Due to increased demand, it might also be possible that the creators of such privacy solutions become more sophisticated, creating even more elaborate and secure technologies that make it ever more difficult for authorities to have any control over it.
Privacy Coin Delistings, Tornado Cash Sanctions - The First Steps Are Done
Right now, we are in my opinion still far away from a straight out ‘ban’ on privacy coins and PriFi solutions. The sector is still too tiny and governments and regulators are simply not bothering that much. Still, the first steps towards a full-blown Streisand Effect can already be seen.
The delistings of privacy coins, as well as the most recent sanctions against Tornado Cash, and the arrest of Alexey Pertsev, its developer, has shown that events like this lead to increased media coverage and thus, more awareness in the general population.
When we look at the adoption rate of cryptocurrencies in general over the past 10 years and think about the potential adoption over the next 10 years, including reaching the ‘critical mass’, it is not outlandish to see a strict ban on privacy coins coming up on the horizon. And if this happens, well - history does not repeat itself; but it often rhymes!
Let’s Unite And Build The Privacy Solutions of Tomorrow
As you may already know, I am working as a core team member for Navcoin. We are currently finishing up our fully-private blockchain, with a unique privacy-enhanced Proof-of-Stake protocol (PePoS), and are not just focusing on offering our users ‘private cash’, but are also working on various other tangible use cases that are possible with our technology.
For example, you will be able to create a 'private version' of any token on Ethereum, BSC, Solana, and other non-private blockchains: a very exciting and important work that will potentially help many users and the cryptocurrency ecosystem as a whole.
On the road towards our goal of making a difference in this space by delivering a useful PriFi ecosystem, we also have a different goal, which is to collaborate with other, different PriFi projects who share the same vision of making the world a better place by building the financial privacy solutions of tomorrow.
At this point, greetings go out to:
& all the other ambitious privacy-related projects out there!