Net Neutrality and Cryptocurrencies
The vote by the FCC to overturn Net Neutrality rules leaves the internet less regulated in favor of ISPs. This newfound power now allows ISPs to throttle, block, or relegate certain content to reduced speeds or pay-for-play fast access lanes. Of course these are worst case scenarios that as of this article have not occurred in the United States.
If Portugal's lack of Net Neutrality is an indicator of things to come, we could be in trouble. Imagine having your internet content served up in packages the way cable television splits television packages into sports, movies, or on-demand content. We can not rely on the altruistic nature of ISPs to do what is fair for consumers while they have the leeway to do what is profitable for their shareholders.
How could cryptocurrencies be affected by the repeal of Net Neutrality?
[Disclaimer/Spoiler Alert: The following includes SHTF scenarios which may never happen.]
The decentralized nature of cryptocurrencies presents a moving target that ISPs would likely have a difficult time isolating for the purpose of throttling or blocking. However cryptos are mined and mostly exchanged online, the blockchains are online, and data is added to the blockchains online.
The ISP is the troll under the internet bridge that can charge a toll for access.
Stopping a cryptocurrency would be a futile for an ISP, but interferring with auxiliary crypto based industries is a possibility. Crypto exchanges are not decentralized nor are they a moving target. Exchanges sit on servers with a fixed IP address. Likewise mining pools have a fixed address. The nature of cryptocurrency makes them susceptible to those who control access to data. Imagine if Verizon developed its own cryptocurrency. Exchanges may list the Verizon coin in order to stay in favor with the ISP to prevent their site from being de-prioritized for delivery to their users. Exchanges that stick with old school coins such as BTC and do not adopt the Verizon coin may find their data reduced to dial up speeds. This wouldn't affect the cryptos directly. It would affect the way in which one may interact with cryptos and reduce user options. Swing trading a crypto on a dial up connection would be insane. Having an exchange whose data is delivered at dial up speed would be the death of that exchange due to the volatile nature of crypto prices.
Slush's pool might have to pay an ante to keep their mining pool accessible, and that cost would be passed on to the pool. A large pool like Slush's could probably afford to pay the gatekeeper. Smaller pools may have to fold if mining is not enough to cover Verizon's fast access lane fee. Naturally this would impact which cryptocurrencies are profitable to be mined and it would affect supply and demand. Who would want a cryptocurrency that taxed as it is mined or has limited trade outlets based on the whim of a gatekeeper? That goes directly against the decentralized benefit of cryptocurrencies.
ISPs now have the potential to set up the elaborate 'Pump and Dump' scenarios within the less than regulated crypto market. Instead of riding the wave, ISPs can be the earthquake that causes the tsunami.
Whether these scenarios will ever come to pass is unknown. What is known is that the potential is now here thanks to Ajit Pai. We just have to have faith that ISPs and their parent corporations will seek to enhance user experience over their own profits.
Good luck with that one.
The Repeal of Net Neutrality was spearheaded by former Verizon attorney Ajit Pai.
Ajit Pai currently serves as Chairman of the FCC where he pretends to be a guardian of consumer communication protection.