Why Government Crackdowns Lead to a Greater in Crypto Use

While Bitcoin has provided many benefits to ordinary people, its relations with the government have not always been seamless. Cryptocurrency has been viewed with distrust by governments around the world for as long as it has been on the public radar. Problems have been raised regarding cryptocurrency eroding the economic sovereignty of the countries in which it is used, as well as its usage as a weapon for crime and environmental concerns.

As a result, Bitcoin has been criminalized in a number of nations. Cryptocurrency use is prohibited in China, and mining equipment is often seized. A restriction has been imposed in Nigeria, prohibiting deposit money banks from enabling any cryptocurrency transactions. India previously imposed a ban on the bitcoin industry, which severely hampered it and resulted in the closure of several businesses.

Surprisingly, despite the sanctions, all three countries consistently rank highly in terms of cryptocurrency transaction volumes. Despite the fact that numerous other factors are at play, transaction volume appears to increase after governments take attempts to curb it inside a country. But what is the source of this?

State of the Nation Pre-Crypto

To understand why cryptocurrency use tends to increase after government crackdowns, consider the circumstances that contributed to their widespread use before the crackdowns. In the examples of India, China, and Nigeria, each country has a large population as well as a large number of people living in poverty.

For many people, bitcoin offers a way to make money, especially if they are unable to use traditional financial services. As a result, even if a government prohibition exists, those who use crypto in these nations are likely to seek alternatives in order to keep access to these technologies. When the governments of these countries are revealed to be corrupt or autocratic, citizens flock to cryptocurrencies even more eagerly as a means of escaping persecution.

Availability of Circumvention Tools 

The cryptocurrency market was designed to be as disruptive to traditional systems as possible, and the fact that it is based on decentralized technology only adds to the community's resilience. Chinese citizens used Virtual Private Networks (VPNs) to conduct their transactions after China outlawed crypto transactions.

Peer-to-peer networks in India and Nigeria experienced record transaction volumes, demonstrating that the movement of cryptocurrencies could not be prevented as long as there was access to some kind of internet.

The Streisand Effect

While there are many economic elements that contribute to the increase in crypto use following government crackdowns, one of the most important is the simple fact that when a government tries to suppress something, it brings more attention to it. Bans and limits were issued in several nations, and the news was widely reported in the media. Online and offline arguments about the merits and risks of the ban ensued, and cryptocurrency gained more prominence than it had before the ban.

People who were unaware of cryptocurrencies got inquisitive, and this, combined with FOMO toward crypto users who swiftly shifted to P2P solutions and VPNs, resulted in additional people entering the market.

Those who previously distrusted the government would be even more drawn to cryptocurrencies since it is designed in such a way that no single person can prevent others from using it. Blockchain has already been used to circumvent government restrictions in nations like China. The entire sector has been portrayed as counterculture and anti-establishment in many respects, and government crackdowns have further added to this image.


Finally, the societal dynamics that support widespread crypto usage generally indicate that those who use crypto would not willingly give it up without a fight, which is why cryptocurrency use often surge after government crackdowns. Because of the nature of cryptocurrencies and the richness of technology available, there are numerous plausible ways to avoid these prohibitions once they are implemented.

Finally, prohibiting a fresh and innovative technology such as cryptocurrencies simply serves to increase public awareness of it, resulting in an influx of users. We can expect crypto usage to continue strong despite government crackdowns, thanks to ubiquitous availability and FOMO.

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