Investment bank analyst: Bitcoin ban is likely to have a counterproductive effect, and the development of digital currency cannot be stopped

Investment bank Needham & Company LLC recently published a commentary on the article "Economic and financial turmoil contributes to the popularity of Bitcoin", discussing several major factors that promote the development and popularity of Bitcoin, including capital controls, banknote abolition, hyperinflation, and even Bitcoin bans. Some of these factors may seem negative at first glance, but Needham believes that they will eventually bring more popularity to Bitcoin, thereby promoting the popularity of this digital currency.

Needham is a nationally recognized investment bank and asset management firm serving growing companies. Since its founding, Needham has successfully led and financed more than 785 public offerings.

Bitcoin ban fails to achieve desired effect

Needham analyst Spencer Bogart explained that certain countries will ban Bitcoin or implement strict regulatory policies.

These actions are certainly harmful to the popularity of Bitcoin, but they also cannot stop the development of Bitcoin.

He added:

Some countries have either issued a Bitcoin ban or introduced strict policies to restrict transactions. However, we have noticed that these policies have had the opposite effect: people in some countries that have explicitly banned or restricted Bitcoin transactions have a strong interest in Bitcoin.

Taking Bangladesh as an example, Bogart pointed out that the country's central bank issued a Bitcoin ban in September 2014, and any "suspect" who uses and holds Bitcoin will face up to 12 years in prison. However, judging from the Internet search volume, the country suddenly became the world's most Bitcoin-focused country in 2016, ranking 7th.

Interestingly, the country’s most popular searches for Bitcoin (Bitcoin wallets, prices, etc.) are all related to the use of the digital currency, rather than negative news related to Ponzi schemes or regulatory news.

Similarly, after the ban on Bitcoin in 2014, Bitcoin searches in Bolivia surged, second only to Bangladesh.

The Streisand effect is a plausible explanation for the phenomenon Bogart describes. Censorship is often counterproductive. The more you try to prevent people from hearing about something, the more they will want to find out the truth.

The popularity of Bitcoin also depends on these factors

Other factors Bogart mentioned as driving Bitcoin adoption include capital controls, demonetization, and hyperinflation.

For example, India began to implement the demonetization policy in November last year. Since then, Bitcoin searches and transactions have increased rapidly, and Bitcoin usage has increased threefold.

Nigeria’s inflation rate doubled in a year, and with it, “there has been an increase in Bitcoin searches in the country.” In addition, Venezuela’s hyperinflation (180%+) has seriously harmed its economy, and people are paying more and more attention to Bitcoin, and trading volume has also increased. He concluded:

Control over capital savings and flows is an important factor driving the popularity of Bitcoin.

Although many countries prohibit the use of Bitcoin, many countries also strongly support this technology. The Swiss Railways has launched a Bitcoin service, where consumers can use Swiss francs to purchase Bitcoin through ticket machines at stations. There are more than 1,000 such ticket machines across the country. The Swiss town of Zug also supports the use of Bitcoin to pay for public services. In addition, Bogart said that Switzerland also plans to issue a "crypto bank" license, which aims to "create a new category of financial institutions that can handle cryptocurrency businesses such as Bitcoin."

According to online search volume, Americans' interest in Bitcoin lags behind even 20 other countries.

While most Bitcoin-related entrepreneurial activity has taken place in the United States, Bitcoin’s international influence has become increasingly evident.

Caracas (the capital of Venezuela), Kuala Lumpur (the capital of Malaysia), Sandton (South Africa) and Lagos (the capital of Nigeria) all have much more interest in Bitcoin than San Francisco and New York.