Why We Can Be Certain Bitcoin Will Never Be Shut Down
At first glance this seems to be a very bold claim.
After all, this is often cited as a reason that Bitcoin can’t succeed, specifically, the point that “they” will simply shut it down. We can assume that “they” is a faceless collection of powers represented in various forms including governments, regulators or even monarchies.
But the reality is that it’s already too late for that. In fact, it was probably too late within a few months of Bitcoin’s birth in 2009 when the practical applications rapidly became clear. At that point, even though the entire ecosystem was tiny, it was already widely adopted enough to make closing it down extremely difficult should the powers that be have been remotely interested in doing so.
Which they weren’t.
And, as a result, that window of opportunity has now closed forever. Bitcoin can now not be stopped by any legislative power on earth, barring an unprecedented joining of global forces by all governments from all sovereign states agreeing a single global course of action in the very near future.
But since we can’t even collectively agree to stop doing activities that will actually kill us — such as pumping highly toxic waste into the atmosphere or flattening entire rainforests — the chances of us coming together and communicating sensibly on global monetary policy is about as far from likely as it could possibly be.
And anyway, we already know it’s impossible. We have a cast iron precedent.
Enter “The Pirate Bay”
Let’s skip the part where you pretend you don’t know what the The Pirate Bay (or simply “TPB”) is, but even so, it’s useful to look at a definition of the project.
Wikipedia’s definition of TPB is actually quite good, although it is also a bit of a mouthful:
The Pirate Bay is an online index of digital content of entertainment media and software … allow[ing] visitors to search, download, and contribute magnet links and torrent files, which facilitate peer-to-peer (P2P) file sharing among users of the BitTorrent protocol.
In other words, it’s a place you can go to download any digital content you like, anonymously and (relatively) safely, entirely on a decentralized peer to peer basis, entirely for free. Oh, and illegally.
The fact that this site is so blatantly illegal even by the most basic application of any copyright law in any jurisdiction in the world and yet still operates so reliably is really quite the achievement.
In fact, TPD has now operated for almost two decades, thereby outlasting other file sharing sites (as they are collectively, and perhaps deceptively, known) such as Napster, Kazaa, Limewire, Kickass Torrents and EXtraTorrents, all of which were successfully hunted down and decimated by law enforcement officials.
How can it be that a site with millions of users globally, all of whom are actively avoiding paying any sort of royalties to the content creators, can continue to operate apparently outside of the law?
After all, governments are actually incentivized to shut it down as fast as possible, at least to some degree — just think of all that lovely taxable income that isn’t being generated as result.
And the scale of the problem is simply enormous. While you may think that downloading series seven of Game of Thrones probably wouldn’t have much of an impact, it does when it’s downloaded illegally a billion times, as in fact happened in 2017.
In 2019, the U.S. Chamber of Commerce’s Global Innovation Policy Center reported its estimate that there are 26.6 billion illegal views of movies produced by U.S. organizations and 126.7 billion views of TV episodes made by U.S. producers every single year on average.
The knock on effect this has on content producers and distributors is thought to be responsible for the loss of 230,000 American jobs and a GDP reduction of approximately $47.5 billion. And that’s just the U.S. industry.
Yet The Pirate Bay continues untroubled, successfully surviving countless full frontal assaults of industry heavy weights armed with huge sums of money and the best lawyers, all of which are further backed by both the letter of the law and the government sanctioned power of enforcement agencies. But again, how have they been able to do this?
The answer lies in the way The Pirate Bay was forced to evolve after it was first created back in 2003.
And it’s quite the story.
The Pirate Bay Prevails?
TPB was just as much a statement of defiance to the powers that be as much as it was a “physical” site, right from the start.
It was the brainchild of three Swedish men — Fredrik Neij, Gottfrid Svartholm and Peter Sunde — all founding members of the anti-copyright group known as Piratbyrån. Originally based in a large data centre in Stockholm without any attempt to hide what they were doing, it wasn’t until May 31st 2006 that the law arrived in the form of a swarm of agents with appropriate paperwork to peacefully shut it all down.
The Pirate Bay was finished, or so the authorities thought.
However, before being arrested, one of the men, Neij, took a few minutes to back up the entire website remotely in a move that would ultimately guarantee TPB’s rebirth just 48 hours later, much to the annoyance of those very same agents and almost certainly many others.
By all accounts, the three men were entirely unphased by their arrest and were confident they wouldn’t be convicted. They initially appeared to be correct when over half the charges were quickly dropped to lack of evidence or jurisdictional issues.
While waiting for trial, the men thought about how they could continue their work and looked at various options up to and including buying an island in international waters that would see them beyond the reach of any legal entity.
As history now shows, the fact that they were unable to raise the funds needed to do this was a blessing. If they had followed this entirely centralized approach, there is little doubt that The Pirate Bay wouldn’t exist today. It is far, far easier to hit a known entity in a known location that it is to find a ghost in the machine, which is what TPB became instead.
Neij, Svartholm and Sunde effectively sold TPB to a vague, shadowy company known as Reservella, based in the Seychelles, although the term “sold” has always been contested due the absolute lack of any evidence of it actually happening. Nevertheless, from that point onwards, TPB moved to a sort of “Ghost Protocol,” becoming more mobile and flexible than it ever was in any previous incarnation, albeit with a few bumps on the way.
Meanwhile, the three men were ultimately convicted on April 17th 2009, almost three years after the initial shutdown had completely failed to kill the site. In fact, in a brazen act of total defiance, it later transpired that Neij had edited Pirate Bay code and fixed a site shutdown while actually sitting in court, an act that won him legendary status among fellow geeks and cyberpunks.
All three were sentenced to prison for one year and made to pay fines of several millions dollars, which they promptly refused to pay. Then, to make their position clear on what they thought of the imposed prison sentence, they just as promptly ran away, successfully evading authorities for many of the following years.
Ultimately, and one by one, they were caught and served their sentences, although restitution remains unpaid to this day. While some say the men are still involved with TPB even now (something denied by all of them) it is clear that the site itself has continued to thrive without their direct input and continues to successfully serve tens (if not hundreds) of millions of users on a regular basis.
Understanding how provides us with keen insight into just how hard it is to identify and close in on any decentralized project, even one as blatantly illegal as The Pirate Bay.
Pirate Bay evolved
The Pirate Bay moved around after the 2006 raid, finding refuge temporarily in The Netherlands, but later setting up back in Stockholm, coming full circle. In 2014, another large raid shut down it down again, this time creating an outage that looked like it might actually be permanent.
But from this point onwards, TPB’s modus operandi changed radically and within two months, the site was back, now located “in the cloud” and maintained by remote and anonymous staffers.
Trying to shut TPD now is next to impossible with the current jurisdictional and legal limitations that exist, simply because these laws were never designed to handle such applications. Who enforces it? Under what law? What if a government doesn’t want to comply with another for political or financial reasons? Or simply doesn't care?
It’s a political, legal and economic mess that is close to impossible to untangle.
And the operators of the current Pirate Bay know it.
The “Pirate Bay Effect”
If closing down an operation that has universal disdain among authorities is this hard, just how difficult would it be for something that is almost universally accepted, at least in terms of basic legality?
The simple fact is that Bitcoin is entirely legal across the vast majority of the planet, even if some areas have some limitations on use or ownership. Even in those very few areas where Bitcoin is banned outright, the law is often hard to enforce.
Some sovereign states are even pro-Bitcoin and are campaigning for related businesses and service to base themselves there. Japan, Malta and Switzerland are often the most quoted as examples, although there are others.
This creates a problem for any nation who wants to ban it completely because it makes it impossible to do so unless all other nations comply.
For example, you could pass legislation closing down all the mining facilities in your jurisdiction, although others located elsewhere will remain operational and the network would be entirely unaffected by your action.
You could do the same with exchanges, but you’d get the same result.
Finally, you could try and ban the internet, but which nation would want to see its citizens rejoin the dark ages to spite a global payment system that everyone else is using anyway? Worse, it is next to impossible to do with so many connection options that reside outside of your jurisdiction. Consider communication satellites, for example. How do you stop people using those?
Some countries have still tried to do it, but even then The Pirate Bay has a precedent that has provided an accurate template for what happens next.
In 2006, just after the first raid on its servers by Swedish police, traffic to TPB almost doubled overnight as news of the site and its appeal to users spread far and wide. Since then, each successive attempt to close it down has actually resulted in increased traffic, at least according to the site’s operators.
It seems the more you try and take something away from the people, the more the people want it. Is there any trait more human?
Just last month, for example, Nigeria suddenly announced that it would clamp down on cryptocurrency users by disallowing any banking services to work with exchanges with little or no warning.
Initially the cryptocurrency community, one of the largest in the world due to the weakness of the nation’s currency, was stunned. But within days, workarounds involving neighboring jurisdictions and peer to peer services began to appear and Bitcoin itself started trading at an enormous premium due to lack of liquidity — up to 46% in some cases according to Coindesk.
The point is, it is already clear that Nigeria’s ban has not worked. It has only succeeded in driving trading underground or out of the country, possibly taking some of the very wealth Nigeria’s authorities are trying to protect with it. Although there’s no clear data on this as yet, it appears that demand for Bitcoin has not decreased at all.
It may even have increased as people scramble to secure whatever they can, urged on by the authorities’ apparent confirmation that the Nigerian currency is heading for further devaluation, and the economy is in serious trouble.
The Pirate Bay may also show us how to stop Bitcoin
Perhaps unexpectedly, there is one more thing that Pirate Bay gives us a small glimpse of; how it may be possible to stop Bitcoin in its tracks. At least in theory.
There has been extensive research carried out in recent years indicating that providing content people are looking for in a certain way reduces the need — or desire — to illegally download it.
Consider, for example, having access to all the top rated TV shows, recent movies, an extensive library of older movies, access to full box sets and exclusive new content whenever you want it at your fingertips for just a few dollars a month?
You know, like some form of “on demand” streaming service?
The rapid growth of services like Netflix, Amazon Prime, Disney + and many others appear to show that demand for pirated content actually falls in tandem with their growth, at least according to several reports such as the one from YouGov in the UK and this one from DigitalMusicNews in the U.S.
At least that’s what the headline numbers would have you believe.
Close examination of these reports, however, shows that only certain types of downloads are reduced, namely (and unsurprisingly) content that can be watched via streaming services. Further, whatever format digital content is provided and at whatever price, a certain — and significant — percentage of the population would continue to download illegally anyway because, well, they can.
The only thing that we can say for sure is that these services probably reduce the propensity for individuals to illegally download certain services.
Extrapolating this, it seems logical that the better and more efficient the legal service is, the less likely it is that people would use services like The Pirate Bay. Perhaps if they were really good, we’d stop using it altogether.
And therein lies the biggest clue to putting a stop to Bitcoin.
Since it absolutely cannot be done with regulation or legislation, now or in any version of the near or medium future, there is only one other way governments could do it — by offering something better.
In other words, if you want to kill Bitcoin, you’d need to employ sound global monetary policy.
Call me cynical, but somehow I think we’re safe for a while.
Want articles and to minute analysis and opinion in your inbox? Why not subscribe to the ‘Bitcoin and Global Finance’ newsletter? Receive special offers and insider info; unsubscribe at any time.
You may also enjoy these:
If you don’t any Bitcoin, you might be tempted to think it’s too late and that ship has sailed. If so, think again. Here’s why:
Why You’re Not Late to the “Bitcoin Party”
No, the ship hasn’t sailed. We’re still building it
With such a strictly limited supply of Bitcoin and such high demand, surely it’s only a matter of time before we run out forever? Not exactly.
Is it possible for Bitcoin’s value to go to zero? In mathematical models, maybe, but in practical terms here’s why that would be extremely unlikely to happen:
Disclosure: The author of this opinion piece has been heavily involved with bitcoin for several years and holds a substantial cryptocurrency portfolio, including bitcoin. He also has a mining operation running the SHA-256 algorithm based in Siberia and is a published author on the subject of promoting the understanding of cryptocurrency. Jason is an analyst at Quantum Economics.
Disclaimer: This content is for educational purposes only. It does not constitute trading advice. Past performance does not indicate future results. Do not invest more than you can afford to lose. If you found this content interesting, and have an interest in commissioning content of your own, check out Quantum Economics’ Analysis on Demand Service.