This is part three of handling objections to Bitcoin, and here we’ll discuss the government and politics category. As before, feel free to skip ahead to a specific objection if you’re currently handling one.
“Bitcoin is vulnerable to the government”
Let’s get into the first political objection: that Bitcoin is vulnerable to the government. People who make this claim may say something like, can’t the government just ban Bitcoin, or seize it, or at least tax it into oblivion?
The answer is yes, but the results of doing so may be surprising. Governments around the world have attempted to ban Bitcoin — but not governments everywhere, all at once.
For example, China famously banned Bitcoin mining in 2021, but that didn’t kill Bitcoin. The net effect was that the epicenter of global hash-rate shifted to the United States, where mining was still legal.
As we enter the era of nation-state adoption, many theorize there will be a global hash-war, meaning countries will attempt to provide the most hash-rate, or raw power, to the Bitcoin mining network in order to reap the most benefits from the protocol and accumulate the most Bitcoin. If this comes true, China’s decision could prove to be one of the costliest blunders in modern warfare.
It’s true that the price of Bitcoin took a hit after the Chinese mining ban, but there were many other factors that probably contributed to that price action — not the least of which were scandals like FTX, and the four-year halving cycle, an idea we discussed previously that refers to a predefined reduction in Bitcoin supply issuance from mining.
The point is, the ban didn’t kill Bitcoin, and in hindsight the price hit was just a temporary setback in the context of the new all-time highs of late 2024.
And while it’s theoretically possible that Bitcoin could be banned everywhere all at once, this is about as likely as the internet or power grid going down across the globe and staying that way indefinitely. Even if governments were able to coordinate such an attack, it’s unlikely that 100% of citizens in every country would choose to comply.
On non-compliance in the Bible, think of Gideon in Judges 6, where he beat out the wheat in secret to hide it from the Midianites — or the Hebrew midwives in Exodus 1, who refused to comply with Pharaoh’s order to kill all the male children.
The fact is, Bitcoin is a decentralized protocol, and copies of the blockchain are hosted by ordinary people around the world in every country. This makes it effectively impossible to ban, as every single person running a node would have to be found out and shut down simultaneously. The governments of the world are powerful, but they’re not omnipotent nor omnipresent.
And with many nation-states announcing plans to launch strategic Bitcoin reserves, including the United States, this objection gets even more far-fetched as time goes on. But what about the idea of seizure?
Honestly, governments do have a history of seizing Bitcoin — and other assets like gold, for that matter. This is what Bitcoiners call a 6102 attack, a reference to FDR’s executive order in 1933 and the Emergency Banking Relief Act, which forced Americans to relinquish their gold under penalty of law.
Given this precedent, it is appropriate to fear government seizure of Bitcoin, and this is why fighting to keep Bitcoin decentralized and in self-custody is so important. With many people now buying Bitcoin through ETFs, most of which currently use Coinbase to actually custody the Bitcoin, there is a credible threat where the US government could seize a sizable amount of Bitcoin from Coinbase.
Of course, this type of seizure isn’t a threat to Bitcoin in general, but rather just to people who don’t practice self-custody. And if the US did decide to take such action, it would probably be to maintain power and wealth, not to destroy Bitcoin — because, unlike other cryptocurrencies which use proof of stake, holding more Bitcoin doesn’t give you any more or less control over the network. We’ll discuss this in more detail shortly.
The final flavor of this objection — the idea that governments will tax or regulate it into oblivion — has some validity, as even now, in early 2025, Bitcoin doesn’t receive the most equitable tax treatment in many developed countries. For example, the United States taxes Bitcoin like property, which means that any buying or selling, or even transacting, falls under capital gains tax law.
If you’re buying and holding, or HODLing, this doesn’t present much of an issue. But if you want to use Bitcoin transactionally on a daily basis, this creates an onerous and often impossible level of accounting to track all the potential gains and losses to report at the end of the year for capital gains taxes.
It’s possible that governments could go further and institute policies like unrealized capital gains taxes, but it’s also becoming more and more likely that Bitcoin will instead be treated as any other currency — and this will pave the way for using it as a medium of exchange, as onerous capital gains accounting will no longer apply.
Only time will tell what the future holds, and there are plenty of countries that already treat Bitcoin favorably, and even as legal tender. In a future where Bitcoin is the global reserve currency, countries will have to compete for productive citizens just like they compete for hash-rate and owning Bitcoin directly.
For more details on the risk of governments banning Bitcoin, read chapter 26 in Broken Money by Lyn Alden and chapter 11 in Gradually, Then Suddenly by Parker Lewis.
“Bitcoin can be hijacked by the powerful”
Let’s move on to the second objection: that Bitcoin can be hijacked by the powerful. People who make this claim may say something like, the government or other rich and powerful organizations like BlackRock can easily manipulate or control Bitcoin.
This seems intuitive in a world powered by fiat currency, where power and money are centralized in the hands of a few — but Bitcoin is the exact opposite. In the previous video, we already discussed how Bitcoin had a fair launch and becomes more distributed over time, and in this video we’ve already shown how Bitcoin is decentralized and has an ever-increasing hash-rate. This makes it nearly impossible for anyone to hijack, much less governments.
From a technical perspective, it is theoretically possible to perform what’s called a 51% attack on Bitcoin, but we’ll discuss this risk more in part four.
The less technical risk of hijacking would be a forced hard-fork from a player such as BlackRock — the company behind the largest Bitcoin ETF — or the US government after a 6102 attack. In this scenario, BlackRock could choose to “fork” the Bitcoin code, or create a copy with a different set of rules, such as an increased supply cap above 21 million coins.
And because people who hold the ETF don’t self-custody their coins, BlackRock could also choose to only support its new fork of Bitcoin for those wishing to sell their ETF shares. Of course, if BlackRock does this, their version of Bitcoin would likely have less value than the original Bitcoin network, because their ETF doesn’t own a majority of Bitcoin, and so the financial incentives would be misaligned for such an attack.
Regardless, this does represent a threat for anyone who chooses to get Bitcoin through the ETFs, and so we recommend using Bitcoin-only reputable exchanges and taking self-custody — but we’ll cover this more in a future video.
For more details on why Bitcoin cannot be easily hijacked, read chapter 10 in The Bitcoin Standard by Saifedean Ammous and chapter 10 in Gradually, Then Suddenly, or watch Bitcoin University’s video BlackRock Taking Over Bitcoin?
“Bitcoin isn’t regulated by the government”
Now we get to the third objection: that Bitcoin isn’t regulated by the government. The idea is that this makes Bitcoin unsafe or unsuitable for normal, law-abiding citizens to use or invest in, because the government doesn’t provide any protection or guardrails.
Obviously, the answer to this objection will vary from country to country, so I’ll just give a perspective on the United States.
First of all, Bitcoin is actually regulated. For example, we’ve already pointed out that the IRS enforces capital gains tax laws when people sell Bitcoin, and we’ve discussed the fact that exchanges are forced to comply with KYC, or know-your-customer laws, which help law enforcement link people with specific transactions.
And with the approval of the ETFs, the SEC has made it clear that it views Bitcoin as a commodity, not a security, and it currently has regulations prohibiting in-kind transfers, meaning that ETF holders cannot exchange shares of their ETF for actual Bitcoin without causing a tax event.
So when someone uses this objection, what they probably mean is that the government doesn’t provide as many protections — like all the regulations around buying and selling securities such as stocks and bonds.
If this is the case, you are likely talking to someone who is used to trading securities through a brokerage account, or to a financial advisor who has a vested interest in being a gatekeeper for the traditional finance system.
These gatekeepers are in lock-step with the government narrative that agencies like the SEC are foundational in protecting retail investors from the sharks on Wall Street — but time and time again this narrative has been exposed as untrue.
For example, the wave of bankruptcies and bailouts during the great financial crisis enriched the banks and politicians who were at the heart of the sub-prime lending fiasco, while at the same time leaving Main Street reeling for years to follow.
But there’s an even deeper, more disturbing truth here that we must recognize: in many ways the governments of modern, mega-nations have become nanny-states that treat their citizens like children.
Many in the West have grown up in a world that promotes very little agency, and holding Bitcoin — a bearer asset — represents a welcome and necessary return to times gone by, when people knew how to take care of themselves, their families, and their communities, and they cherished individual liberty and personal responsibility to those ends.
So while getting into Bitcoin may seem like the wild west compared to putting money into tightly regulated securities like stocks and bonds, I would argue that the modern financial system, with all of its safety mechanisms — which do more to control you than to keep you safe — would be unrecognizable, or even perceived as totalitarian, to most people from previous centuries.
Sadly, government regulations have a long history of giving people a false sense of security and protecting big corporate interests. Regulations also have a poor track record of actually preventing crises, and instead have often resulted in government bailouts for industries that are too big to fail — or in other words, crony capitalism.
If you’re interested in more details and examples about how government regulations often work contrary to their own stated goals, read Basic Economics and Applied Economics by Thomas Sowell.
In the end, people do have to choose how much individual liberty to give up to a third party that claims to offer safety and protection — but this requires an enormous amount of trust, and in the case of our governments and financial institutions, this trust has been broken again and again, which introduces more counterparty risk than most people are willing to acknowledge.
For more details on a world of freedoms versus a world of control, read chapter 30 in Broken Money.
“Bitcoin undermines the authority of the government”
So does this mean that Bitcoin undermines the authority of the government? This is the fourth objection: that Bitcoin promotes anarchy, while the Bible says we should submit to and trust the government.
Paul says in Romans 13:
Let every person be subject to the governing authorities. For there is no authority except from God, and those that exist have been instituted by God. Therefore whoever resists the authorities resists what God has appointed, and those who resist will incur judgment.
Romans 13:1–2
Romans makes it pretty clear that the government has been instituted by God, and that the default position of Christians isn’t to fight against the civil authorities. So how does Bitcoin fit into the mix?
Well, firstly, Bitcoin is a neutral technology that doesn’t promote any particular political ideology. It is true that in the early days Bitcoin attracted hard-core libertarians, and even anarcho-capitalist or natural-law types, but this is a reflection of the early adopters, not the technology itself.
As a technology, Bitcoin does promote the free exchange of value between individuals without any third-party control — but such transactions have been possible via gold, and even physical fiat currency, for centuries, in the context of all types of political systems.
That is to say, it is possible to have any number of combinations of economic and political systems, and if history is our judge, the societies that used the most open and free economic systems have thrived the most, at least from a material standpoint, regardless of the political system in power.
But doesn’t Bitcoin undermine the government’s authority to coin money? For example, Article 1, Section 8 of the Constitution of the United States gives the government the right to coin money, regulate the value thereof, and fix the standard of weights and measures.
The answer is no. The government maintains the power to declare what is legal tender — in other words, what can be used to pay debts both public and private, and to pay taxes. In the case of the United States, this is of course the US dollar, and Bitcoin cannot and does not have control over this.
The US government has already classified Bitcoin as property, at least from a tax standpoint, and this means it’s legal to own and trade.
Again, this is specific to the United States at the time of this recording, and your mileage may vary if you live elsewhere, so please be careful to understand and obey all the local laws and regulations in your jurisdiction — and of course, be sure to pay your taxes in the currency that your government requires. If Bitcoin can help you do this, great!
There is one other flavor of this objection: that Bitcoin weakens fiat currencies, which thereby weakens the governments that issue them, which in turn undermines their power and authority.
The argument is that, even though Bitcoin doesn’t claim to be legal tender, many have already accepted it as money, and when they sell their fiat currencies to buy it, those currencies suffer while Bitcoin continues to appreciate.
Granted, this is the situation for most, if not all, fiat currencies — but I would argue that this is actually victim-blaming.
The reality is that it’s governments that voluntarily choose to debase their currencies by maintaining reckless fiscal and monetary policies, such as endless deficit spending, which is fueled by bond purchases from central banks that create the money out of thin air.
Then, to add fuel to the fire, governments license banks that participate in unethical practices such as fractional reserve banking, where banks loan out demand deposits. Contractually, bank customers have the right to demand repayment of such deposits at any time without warning, and this has led to countless insolvencies and bank runs, which then cause the government to print even more money to bail out the banks.
All of this activity increases the money supply, which is the true cause of the inflation that ultimately motivates people to sell fiat for Bitcoin. Yes, this selling does put further downward pressure on fiat currencies, but the same argument can be made for any asset class that people monetize as an inflation hedge, such as real estate, gold, or art.
To paraphrase Ludwig von Mises, inflation is not a random or spontaneous event, but rather the consequence of a deliberate policy — and the end result is the loss of purchasing power, which is effectively the same as theft. And even if this is a government policy, that doesn’t make it just. The Bible expects us to be prudent and wise with our wealth, and using inflation hedges, Bitcoin or otherwise, is a natural and sad consequence of the fiat system in which we live.
For more details on inflation, and how the financial system and fiat currencies actually work, read chapters 14 and 15 in Broken Money.
“Bitcoin is a government psyop”
Now let’s address the fifth and final objection in the government and politics category: that Bitcoin is an elaborate government psyop, or psychological operation. People who make this claim might say that a government agency, like the CIA or NSA, created it, and therefore the government surreptitiously controls it for unknown or potentially nefarious reasons.
I’ll give it credit — this is a pretty fun conspiracy theory. But there isn’t any evidence to support these claims, and the premise doesn’t even really make sense.
Bitcoin University has a great video called Is Bitcoin a Giant Psyop? In it, Matthew Kratter points out the absurdity of a government that is simultaneously attempting to control every aspect of its citizens’ lives, financial or otherwise, while also effectively making the following statements by creating Bitcoin:
- Let’s give them censorship-resistant money that they can send to anyone in the world without our permission.
- Let’s give them a powerful bearer asset that they can self-custody, and thus hold gigantic amounts of money outside of the banking system.
- And in the process, let’s help defund the US federal government by putting an end to the Fed’s ability to print money.
The full video is well worth watching, so check it out. Of course, a lot has changed even since the video was released, so this objection makes even less sense at this point. The United States is talking about establishing a strategic Bitcoin reserve by buying Bitcoin — but if the government created Bitcoin in the first place, and thus presumably controls it, why do they need to buy it?
As you can see, as time marches on, many of these objections start to sound pretty silly — but don’t use this as an excuse to be impatient or condescending. Remember, most people haven’t really given much time or attention to these ideas, and they may just be repeating things they’ve heard in passing.
And with that, we’ve covered the top five objections related to government and politics. Next, we’ll cover the technical objections to Bitcoin.