With net neutrality laws ready to hit Congress one more time, the internet is once again abuzz with talk about the fallout from such legislation passing. Former presidential candidate Bernie Sanders stated on Facebook while linking to this article on The Verge:
This is a very big deal. Once again, the Trump administration sides with big money and against democracy.
What we’d like to know is, what sort of effects could cryptocurrency see? If net neutrality is dismantled, will it lead to a major crypto crash? Will markets only be minimally affected? Let’s review a few of the possibilities if net neutrality laws are struck down, and major ISPs take action against cryptocurrencies.
Scenario One: Throttling and lock down – America sent to the dark ages
ISPs in America are typically massive, sprawling conglomerates that have business interests and investments all over the country. It won’t take long until one of these vested interests cries foul on cryptocurrency, forcing ISPs to react. Their response is to throttle or outright block any cryptocurrency related service.
Miners big and small in America find themselves unable to connect to cryptocurrency networks, and hash rates drop. Americans are then locked out of exchanges, and funds become more and more difficult to access or move.
The result: American miners go out of business, American crypto businesses go belly-up overnight, and the country is left behind as the world adopts the crypto revolution.
Scenario Two: ISPs support cryptocurrency but want to control it completely
Let’s say that ISPs decide to not support any established cryptocurrency. Instead, for the sake of argument let’s imagine they decide to create their own cryptocurrency called ISP coin.
Now let’s imagine that the people behind this cryptocurrency pre-mined a huge amount and as a result, they stand to gain a lot of money if the value of their cryptocurrency goes up significantly. In this case, it makes sense that they would do everything in their power to prevent other cryptocurrenies from being successful or achieving widespread adoption.
This is in line with other technologists suggestions that net neutrality laws prevent these kinds of monopolies from developing. For example, having no net neutrality laws in theory would prevent a YouTube competitor from gaining any traction because their bandwidth would always be lowered. In the case of cryptocurrency, the exact circumstance could potentially unfold.
Scenario Three: ISPs support some, harm other cryptocurrencies
Let’s say that instead of creating their own cryptocurrency, which would admittedly be a silly thing to do, perhaps an ISP makes a very large investment into a pre-existing one. As a result, a very similar circumstance to scenario two would unfold. Specifically, we could see the proliferation of the preferred cryptocurrency, and other non-preferred cryptocurrencies could suffer from negative effects such as throttling, blocking, or otherwise harmfully manipulating their networks.
If this were to happen the impact will only occur within the US market. Therefore it is possible that a currency that still has a large foothold in a different territory could continue to be successful despite the lack of support in the US.
Short-term versus long-term impacts
It’s safe to say that if net neutrality laws are impacted in such a way that ISPs can manipulate traffic easily, the impact on cryptocurrency would not likely be immediate. At this point, cryptocurrency adoption is still low enough that it is likely not on a high priority list of things for ISPs to manipulate.
However over the next several years, and especially if something like bitcoin is able to achieve a $1 million per unit price, we may see ISPs take action against or for their preferred or non preferred cryptocurrencies.
And much like how social networks and video sharing sites may be affected by preferential treatment, it is possible that more established cryptocurrency sites that can afford preferential treatment may have a very large advantage and may be able to pay ISPs for faster service. This could lead to an increase in service fees due to no competition.
At this point, however, all of this is conjecture and we will have to see how things unfold if such laws take effect.
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