October 2nd, 2019
If you have taken the plunge into crypto, it won’t be long until you come across the term ‘censorship resistance’ and are told by a bunch of anonymous crypto enthusiasts that this is a game-changer that crypto can bring to the world!
The problem is that few people actually explain why censorship resistance is actually important. Naturally, this can be off-putting for those who want to truly understand the value of cryptocurrency and educate themselves about the benefits of decentralized cryptocurrencies. That’s why we decided to write this article, tell you exactly what is meant by censorship resistance and why it could actually be the key to the mass adoption of cryptocurrency.
The truth is that censorship resistance has never been officially defined. However, most in the crypto space understand the term as meaning:
“The ability to resist the suppression or prohibition of payments or an individual’s account balances by a centralized entity like a government or a bank.”
Now, the chances are that if you are reading this article, you are living in a developed country with seemingly little oppression from banks or your government. You might think that you have had no issue with processing payments from your bank account to anyone you want and that your bank has never frozen your bank account. This indeed would be true for many in the developed world.
If the centralized authorities that have control over our monetary system always play fair, then there is frankly little need for censorship resistance talked about in crypto. However, the problem is that many overlook the value of censorship resistance until it’s too late. A great example of this is the Cypriot banking crisis of 2013. Cypriots woke up one morning to discover that 47.5% of their savings had been confiscated by the government on bank deposits above €100,000. In total, the Cypriot government, without consent, took over €4 billion from its own citizens to shore up their countries failing banks. Furthermore, the Cypriot government took steps a little further by imposing severe restrictions on cash withdrawals to prevent a bank run.
The hard lesson that Cypriots had to learn in 2013 was that their government and banks could not be trusted and that the centralized banking system had been used against them to relieve them of their hard-earned savings.
With truly censorship-resistant money, the important thing to know is that governments or banks are unable to confiscate your funds overnight or limit your access to it. Sadly, it’s a lesson that far too many never learn until it’s too late. If you think that the plight of Cypriot citizens will never happen to you, maybe it’s worth doing a bit of research on Google to find out how much national debt your country actually has and the strength of the banks you entrust with your money to. Chances are, it will make you consider hedging against the government or banking sector incompetence with censorship-resistant cryptocurrencies.
Hong Kong is perhaps one of the biggest hubs of civil unrest in the world. Mass protests, clashes with the police and calls for President Trump to liberate Hong Kong were kickstarted by the proposal of legislation which would make it possible for Hong Kong citizens to be extradited to the Chinese mainland. The threat was that both Hong Kong citizens and visitors would be effectively placed under Chinese jurisdiction, which would undermine the autonomy of Hong Kong.
The thing to understand about Hong Kong is that the population has very different views and values than mainland China. This is thanks to Hong Kong being a British colony for over 150 years until the handover in 1997. Even today, Hong Kong still models its legal system on the British one and values transparency, due process and democracy. The difference in outlook compared to the mainland Chinese gave rise to the “one country, two systems” policy, which saw Hong Kong basic law superseding mainland Chinese law for 50 years after the handover. This decision was made to protect Hong Kong’s democracy, the rights of its citizens to protest, to preserve freedom of speech and the Hong Kong press. The key thing here is that although these rights are taken for granted in many developed nations, it is not so in mainland China.
The Hong Kong protests are all about China’s encroachment on the rights of Hong Kong citizens and a desperate attempt to preserve their democracy and the freedoms that they currently enjoy. For many in Hong Kong, it is a battle to preserve democracy and freedom against subservience to mainland China. What was once a peaceful protest has now descended into violent suppression and mass censorship.
You would have thought that 100’s of thousands of protestors in Hong Kong would have made national news in China. The truth is that the Chinese media failed to report on the protests on the 9th of June 2019, despite the movement making international headlines. Instead, the Chinese government adopted a strategy of online censorship on popular social platforms like WeChat (Chinese Whatsapp) and Weibo (a popular microblogging platform). Any posts on these social platforms containing keywords like “Hong Kong government” or “Hong Kong” were removed and censored.
The Chinese government then decided to run a media campaign of its own to get across the following points:
Tensions increased when Hong Kong protestors retaliated by vandalizing China’s liaison office, which pushed the Chinese publication People’s Daily to publish an editorial on how “the central authority will not be challenged”. China had seemly decided to try and control the narrative and break media silence by running the hashtag campaign #TheCentralAuthorityWillNotBeChallenged on Weibo, which drew in 160,000 participants.
On the 21st of July, gangs of men in white T-shirts were spotted in Hong Kong beating and suppressing protestors. It is still unknown if these thugs were local Hong Kong people or mainland Chinese let loose on the local population. However, the Chinese government wasted little time to portray the battles between Hong Kong protestors dressed in black and the white T-shirt wearing thugs as a story of good versus evil. This narrative was then spread internationally by pro-Chinese Twitter and Facebook accounts, with both social platforms suspending many of these accounts for distributing state-sponsored fake news.
The battle for the narrative in Hong Kong also saw the messaging app Telegram take center stage. For those who don’t know, Telegram is a messaging app commonly used by many in the crypto space. Chinese servers launched a massive DDoS attack to try and take the messaging app offline. This attack failed. However, it’s reported that many Hong Kong protestors have been arrested due to sending pro-Hong Kong Messages on the app.
Facial recognition towers have also been installed in Hong Kong in a bid to empower Bejing to monitor who was participating in the protests. Needless to say, the Hong Kong protestors fought back against these state-backed monitoring systems by destroying many of these surveillance tools.
The Hong Kong protests show how technologically advanced states can use centralized technology to censor, intimidate and monitor their own populations. Indeed, this fear of state-backed surveillance is one of the key reasons why so many Hong Kong protestors have opted out of using state-backed payment methods like Octopus transport cards. The fear is that the Chinese government is monitoring these transactions and that they would be able to identify exactly who traveled to participate in the protests and punish the offenders. Instead, protestors have opted to use ticket machines accepting cash to travel to the protests, so as not to leave a paper trail for the authorities.
The problem for those buying their train tickets to attend protests with cash is that they still can be monitored by CCTV and that’s led to many covering their faces when using public transport. The risks and potential traps for the Hong Kong protestors are astonishing and this hotspot of civil unrest just goes to show how easy it is to monitor people with non-censorship-resistant money.
Unsurprisingly, Hong Kong citizens are now beginning to recognize the value of censorship-resistant money that even the Chinese government finds difficult to monitor, track and tie to a person’s real identity. That’s probably why Bitcoin is trading at a $160 premium on Hong Kong-based exchanges and why there has recently been phenomenal growth in the number of Hong Kong stores accepting crypto as a payment method.
Although Hong Kong may seem like a far-flung place many thousands of miles away from you, can you really trust your own government and banking sector? It’s easy to think that what has happened to the citizens of Hong Kong will never happen to us. However, how outlandish is it to consider a future where your government could label a peaceful protest as one carried out by terrorists, monitor the transactions made by protestors and use that data to freeze bank accounts and prosecute the people digitally tied to those transactions? If you have doubts or want to hedge against that possibility, then this is one of the main reasons so many are turning to censorship-resistant cryptocurrencies. The citizens of Hong Kong appear to be doing just that and adopting crypto at an increasing rate.
If we look around the world, there are many governments that most would call questionable, ruling over massive populations. Now consider what would happen if a fraction of those populations wanted to hedge against the possibility of state-sponsored oppression and you’ll see why the censorship-resistant characteristics of many cryptos could really be the key to mass adoption. How many non-state backed forms of payment have you currently got access to?
Financial control and monitoring are part and parcel of the traditional banking sector. The good news is that most developed countries have legal standards and processes implemented to prevent the abusive use of that data. Privacy is taken pretty seriously and incompetent data handlers are punished.
Most people in developed nations seem to be comfortable with the amount of privacy and protection offered by the current system. However, what about the rise of far-right parties across the world? Lega Nord in Italy, The French National Rally party and the Hungarian Prime Minister, Viktor Orbán are all stark reminders of the current polarization that is sweeping the globe. One thing to remember with far-right parties is that they have been commonly associated with increasing levels of state control and monitoring. This could mean that the need for censorship-resistant, non-state-backed payment methods is greater than ever in many parts of the world.
Maybe now is the time to start questioning how safe your financial data really is before it’s too late and explore the real benefits that censorship-resistant cryptocurrencies can offer you.
Many cryptocurrencies have been built on the principles of decentralization and censorship resistance. However, some are more censorship-resistant than others. Let’s look at Bitcoin; the world’s most popular crypto, which has the longest track record and is exceptionally censorship-resistant.
However, what many do not know is that Bitcoin is arguably not the most censorship-resistant crypto out there. This is because Bitcoin needs a node, operated by a third party, to process your transaction across the Bitcoin network. This happens because your typical computer is simply not powerful enough to process your transaction in a reasonable period of time. Instead, that computing computer is provided by Bitcoin miners who process your transaction for you. The result is that most people using Bitcoin are dependent on third parties to process transactions and that opens the door for these third parties to censor transactions.
Nimiq is a cryptocurrency payment system native to the web which is arguably even more censorship-resistant than Bitcoin. The reason why is that Nimiq users don’t need a node controlled or operated by any third party to broadcast a transaction across the network and enables users to do this directly. This is all thanks to Nimiq’s one-of-kind architecture, which has been built specifically with censorship-resistance in mind. The result is that this little known cryptocurrency is perhaps the most censorship-resistant crypto out there and that Nimiq users have unrivaled control over their funds and resistance to oppressive states confiscating user balances, censoring transactions and imposing financial controls.
Nimiq is a cryptocurrency payment system which is native to the web and is focused on being the most censorship-resistant digital cash in the world. The NIM token acts as a store and transfer of value within the Nimiq ecosystem. One of the main features of Nimiq is that its diverse ecosystem of apps is all focused on making things simple and easy to use for both technical and non-technical users alike. It’s a similar strategy to the likes of Apple, who spend a lot of time and resources to make complicated tech amazingly simple for people to use. Indeed, we believe this is the main driving force behind the success and widespread adoption of Apple products and Nimiq has gone down a similar route.
Right now, no cryptocurrency has achieved mass adoption. However, if you believe that simplicity is one of the most important attributes resulting in tech mass adoption, then its worth checking out Nimiq’s simple and easy user interfaces geared for use by ordinary people.
Why not try it out for yourself and see how you can get set up and ready to use Nimiq in just 30 seconds. You’ll even get some free NIM in the process too!
Nimiq can also lay claim to being the first browser-based blockchain, meaning that the NIM token is actually native to the web. The result is that Nimiq users can use Nimiq with just a web browser and don’t need any time-consuming or complicated downloads. This gives Nimiq that unique ‘it just works feel’. It’s a bit like how you used to have to buy Microsoft excel and install the software on your computer. Nowadays, things are a whole lot easier with Google Sheets which can be used by anyone in their web browser with no downloads at all; it just works.
Scalability is one of the major issues facing cryptocurrencies right now. This technical term simply refers to a crypto payment system’s ability to serve a lot of people. The truth is that if everyone adopted Bitcoin today, it wouldn’t be a very practical currency at all. This is because Bitcoin can only process 7 transactions per second. To place this into context, traditional payment systems like PayPal operate on an average of 193 transactions per second. This transaction shortfall would mean that it would take a long time for Bitcoin transactions to be broadcast across the network. In practical terms, this means that if Bitcoin was mass adopted tomorrow and you went to a gas station, filled up your car and paid with bitcoin, you would have to wait weeks or even months for your Bitcoin transaction to go through. Now, we don’t know how patient you are, but that’s not very practical money in our book. However, the more transactions per second a blockchain can process, the shorter the period of time users have to wait for their payment to be processed. That’s why many people believe that crypto is not ready for mass adoption right now and why solving scalability issues are at the forefront of the crypto and blockchain space.
Nimiq is tackling the scalability issue too with their friends at Trinkler Software, which is led by Forbes 30 Under 30 winner Reto Trinkler. The collaboration has seen a new technical paper published for a new proof-of-stake consensus algorithm called Albatross. What’s particularly exciting is that this initial research has indicated that Albatross is able to achieve transaction speeds close to the theoretical maximum for any single-chain blockchain. If these initial findings are true, then this means that Nimiq could have the fastest blockchain in the world and be capable of scaling to levels of adoption five times greater than PayPal.
Nimiq plans to integrate Albatross into Nimiq 2.0 which is scheduled in 2020 and it is reported that a speed of 1,000+ transactions per second is possible. If this comes to pass, it will mean that Nimiq can support a hell of a lot of users and make it a strong candidate for mass adoption.
Censorship-resistance is perhaps one of the most widely misunderstood and undervalued characteristics of cryptocurrency. What the Hong Kong protests and Cypriot banking crisis of 2013 show are that there is a very real role for censorship-resistant cryptocurrencies.
The downside of increasing progress in technology is that it is becoming increasingly easy for governments to monitor and oppress their population Censorship-resistant cryptocurrencies can be viewed as part of a citizen’s tool kit to fight back and protect themselves against this sort of oppression.
It’s maybe a bit like the proliferation of nuclear weapons. Yes, many have been built, but almost no one wants to see them actually used. The value of censorship-resistant cryptocurrencies is something that no one ever wants to have to fall back on. After all, this means that your government is acting in an oppressive way and that’s not good news. However, even if you don’t personally have to ever resort to using a censorship-resistant form of non-state-backed money, it doesn’t mean there has been no value created. Just having this hedge to safeguard you in an uncertain world could make a very real difference. Indeed, the mere existence of just censorship-resistant cryptocurrencies may even play a role in incentivizing banks and governments to behave more honestly and that’s a wonderful thing indeed.
It’s easy to forget that Hong Kong is just one hotspot of civil unrest in the world. We must also remember there are many places in the world experiencing oppression or on the verge of potential civil unrest. What’s particularly alarming is that this instability is not just restricted to developing countries. The rise of far-right parties in Europe could be just a powder keg waiting to explode and who knows what sort of unrest and tension Brexit might unleash upon the UK and Europe.
Censorship-resistant cryptocurrencies might just save us all. If you believe this, then you’ll understand why crypto’s censorship-resistance might just be the key to unlocking the mass adoption of crypto.
Disclaimer: The author holds some NIM in their portfolio and is compensated in a long-term independent consulting capacity by Nimiq. This article must not be construed as investment advice. Always do your own research.