South Korea moves to ban crypto trading
There's a big question looming in the future: what happens when a government outright makes trading cryptocurrencies against the law? South Korea, it appears, is about to do exactly that, with a law being rushed through to block trading entirely.
Cryptocurrency is hot in South Korea, and the authorities know it: the country makes up for a reported 35 to 40 percent of worldwide trading. The consequences of a ban? Well, it certainly won't make it go away:
“Keen traders, especially hackers, will find it tough to cash out their gains from virtual coin investments in Korea but they can go overseas, for example Japan,” Mun said.
As a part of the crackdown, authorities are also raiding exchanges based in South Korea, alleging that unpaid taxes are the reason. With all of this in mind, what makes governments so afraid of cryptocurrencies?
There are a number of issues that likely push a country like South Korea into taking action. Well, cryptocurrencies sell themselves as a way to be rid of the traditional money system, which is an issue on many levels as banks could suddenly be obsolete. The problem for banks, unfortunately, is younger generations don't tend to trust them thanks to years of falling interest rates and rising fees.
Felix Salmon famously wrote years ago about this phenomenon, and that much of the current craze is a byproduct of cratering trust in the system rather than Bitcoin itself being interesting:
The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.
So — the big question at hand, is if a country bans cryptocurrencies, what happens? The answer, as always, is probably nothing.
Entire countries have banned Airbnb, but the service thrives because, as it turns out, the government doesn't tend to control the internet unless it really comes down hard.
Yes, it might get harder to trade crypto, but it won't probably matter in the long run as people find workarounds to get their cash in (and out) of the virtual currency. Regardless, it's an interesting exercise in "what happens if there's a run on Bitcoin" when the law comes into place, if it passes.
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