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What if governments ban/regulate crypto?

Crypto is essentially purpose designed to defeat governments, so they aren't going to have much luck.

First, if government could kill crypto they would have already done it, so clearly the current crypto infrastructure is already strong enough that a direct attack has been deemed unfeasible.

Second, consider the following problems that government faces in trying to regulate or ban cryptocurrency out of existence:

  • Priorities: Governments are busy. Governments have to worry about a hundred different things including roads, healthcare, education, protesting citizens, other countries etc. etc. etc. Crypto doesn't. Government has a few days a year to fight crypto, but crypto has every day to fight government.
  • Coordination: Governments are not coordinated. They struggle to act consistently within one country, let alone cooperate internationally. The cryptocurrency industry is not centrally coordinated, but it is universally interested in subverting or creating grief for governments, leading to an unstoppable onslaught of randomly varied crypto attacks.
  • Attack surface: Governments have no obvious point to attack cryptocurrency. Even just Bitcoin Cash is hard to find a weak point, given that the miners, nodes, users and exchanges all are hard to effectively fight. Then consider that BCH is just one of 10 000 cryptos, which each have their own technology, community and approach to resisting government interference.
  • Innovation: Crypto is fast. The industry innovates and evolves at breakneck speed (not to mention, coins can copy from each other), which slow-moving legal and political entities cannot hope to keep up with.
  • Economic incentives: Crypto rewards acceptance. A government that bans crypto merely encourages other governments to embrace crypto and receive the flood of business and investment from the crypto industry into their economy. Governments can only ban themselves from benefiting from crypto, they can't stop the industry globally.
  • Internal crypto converts: Government is filled with crypto adopters. Government officials and legislators will invest in crypto or have crypto holdings, and therefore quietly undermine any government attack on it from within to protect their own investment.

Government meddling may be able to slow crypto a little, but not all that much, and it is a battle they absolutely cannot win in the long run.

See also: What if governments make their own crypto?