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The editors of BeInCrypto tried to find out how the scaling of sanctions could affect bitcoin and the cryptocurrency market
At the end of February, the United States increased sanctions pressure against Russia due to the geopolitical conflict with Ukraine. Soon the scale of restrictions reached the cryptocurrency market. The editors tried to figure out what will happen to bitcoin if isolation from Europe and the United States reaches its climax.
Bitcoin will live, but not everywhere
First of all, it is worth noting that Bitcoin itself will continue to exist. The West has long prepared for even the toughest scenarios. For example, the Blockstream company launched its own satellite into space with support for the Bitcoin network a long time ago. The BitMEX exchange has already connected to it.
However, they admitted that they are not completely sure of the usefulness of the satellite for exchanges due to certain restrictions when completely disconnected from the Internet. In addition, data transmission is centrally controlled by Blockstream, which also complies with the requirements of the sanctions regime.
In Russia, too, by the way, they proposed launching a blockchain satellite into space, but so far no progress has been made officially beyond talk.
Miners between two fires
Whether the sanctions have affected bitcoin miners is still difficult to say. It is known that restrictions are already being introduced in some of the largest mining pools for ether. However, even if miners from Russia are cut off from the entire market, although this will lead to a reorganization of the hashrate, it will not greatly affect the entire bitcoin network.
This is because the US alone accounts for 35.2% of the total network hashrate, according to the University of Cambridge. For comparison, Russia accounts for 13.6% and Kazakhstan for 21.9%. In fact, the US almost covers the market of Russia and Kazakhstan. You can read about how the protests in Kazakhstan and the complete shutdown of the Internet in the region affected bitcoin (and whether it affected at all) here.
Non-custodial wallets under attack
There is an expression in the cryptocurrency community “not your keys, not your cryptocurrency”. This implies that the maximum security of a cryptocurrency can only be in personal storage on a wallet with control of a private key.
However, even here there can be difficulties. One such illustrative example was the MetaMask non-custodial wallet, which temporarily became unavailable to all users from Venezuela. Shortly after the wave of indignation appeared on the Internet, representatives of the wallet said that the cause of the problems was “incorrect configuration” at the data provider – Infura.
Of course, MetaMask does not support bitcoin. However, this does not mean that other non-custodial bitcoin wallets do not work on a similar principle. Most mobile applications for storing cryptocurrencies use the services of API providers in one way or another.
It is simply convenient and expedient from an economic point of view. There is no need for a business to deploy and maintain a node for each individual blockchain network. Instead, there are providers like Infura, Alchemy and others who take care of all the technical part and process transfers, display rates and other indicators. These same providers decide whether you can send cryptocurrency on most applications or not.
The only option for the most secure storage and circulation of bitcoin is the full download of the node, however, the network weight exceeds 200 GB. Also, the user should understand that even with a full node, you still need an active Internet connection for constant data exchange.
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