Completely shutting down all cryptos would have the following effects:
- Immediately reducing electricity consumption worldwide
- Making money transfer for illegal activities (drug, human trafficking, prostitution, gambling, ...) harder
- Making money laundering of said activities harder
- Reducing the electronic chip shortage
- Forcing a bunch of young, adventurous, often quite clever people to find another source of revenues. Hopefully by providing some tangible value to society
It sound like a good plan. The only real I see are for people using cryptos in authoritative regimes, so overall a net benefit for the world.
Think this through for a bit. Governments have holdings in bitcoin. Financial institutions have holdings in bitcoin. Citizens have significant percentages of their savings in bitcoin. Bitcoin is available in various financial instruments now, so this would have knock-on effects in the wider market. A large percentage of crypto hash rate is from unknown parties or distributed on regular computers/phones/botnets, so the governments would have to invest money into mining equipment to run this 51% attack that would end up being totally dead money after the attack. You'd have lobbying from huge money sources to stop this happening. You'd have governments looking to take advantage of this. You'd be trying to destroy the legal tender of some countries which I believe is illegal under international law. By increasing the hash rate you'd be increasing the price of the coin and incentivizing people to defend against it. And, if it all happened, people could do what happened to Ethereum and simply fork Bitcoin from the point of the attack. No more mining equipment? Run PoS.
What governments have holdings in bitcoin? If you refer to El Salvador I don't think that this is a shining example. If you're referring to failed states, like Venezuela, I'd like to see a source for your assessment. Having as much funds as possible in hard currency is much more important for such countries. That's why I don't buy it.
> Financial institutions have holdings in bitcoin
I'm working in finance and argue that they don't hold funds in bitcoin. At least not their own funds. Sure, they're looking into crypto and blockchain. They could miss on the next big thing (yet to materialize). But I've yet to see a marketable offering, or a useful solution based on the technology by any reputable financial institution. If you know of an established bank (I rule out crypto exchanges in any form), which invests in crypto I'm interested in who this may be.
Sure, lobbying is an issue, but if the government is lobbied to support crypto, they support crypto. I'm starting from the assumption that they see it as an existential threat and want to eradicate it.
When I say "governments", I mean the likes if China, the US, and some key states of the EU. Really not that many.
El Salvador also had the US dollar as an official currency, does that mean they get to sue you if you destroy US dollars or devalue the currency (as the US can do)? Of course not, because while it's a currency the Salvadoran government agrees to accept, it's not actually their sovereign currency.
In any case, I found the above post compelling. What if critics of crypto pooled resources and waited for a major crisis, and then launched a 51% attack at just the right moment? It's an interesting thing to think about.
The mob of laser-eye HODLbugs will fall right in line and go on full social media attack against anyone supporting the old chain. All will all vehemently deny any ensuing comparison to ETH vs ETH classic.