How the End of Net Neutrality Could Affect Cryptocurrencies
The Federal Communication Commission (FCC) is preparing for a vote on December 14 where it may repeal net neutrality regulations put in place during the Obama era. The FCC is “the federal agency responsible for implementing and enforcing America’s communications law and regulations.” The U.S. government agency is overseen by Congress in its dealings.
The announcement was made on November 21, 2017, by Ajit Pai, the commission’s chairman in a draft titled “Restoring Internet Freedom Order” where he put forward his proposals to reduce regulations on Internet providers in an effort to increase innovation. Net neutrality regulations classify the Internet as a utility, but Pai believes “that decision was a mistake. It’s depressed investment in building and expanding broadband networks and deterred innovation.”
Presently, Internet providers in the U.S. are required by law to ensure that all Internet traffic is treated equally; access to content online is given at the same rate regardless of the source or the nature of the subject matter, so long as it is lawful. This is the nature of net neutrality. This gives consumers a certain level of protection as they are able to access the Internet fairly, without ISP’s using their power to throttle, slow down or even outrightly restrict access to specific content.
However, Pai expressed disdain for the regulations, believing them to have failed. He stated: “Today, I have shared with my colleagues a draft order that would abandon this failed approach and return to the longstanding consensus that served consumers well for decades. Under my proposal, the federal government will stop micromanaging the Internet. Instead, the FCC would simply require Internet service providers to be transparent about their practices so that consumers can buy the service plan that’s best for them and entrepreneurs and other small businesses can have the technical information they need to innovate.”
Widespread criticism and pushback from a wide range of people followed the chairman’s announcement. Many were concerned that the repeal would mean less consumer protection while simultaneously giving excess power to Internet Service Providers.
Michael Beckerman, the CEO of the Internet Association, released a statement decrying the move stating:
“Chairman Pai’s proposal, if implemented, represents the end of net neutrality as we know it and defies the will of millions of Americans who support the 2015 Open Internet Order. This proposal undoes nearly two decades of bipartisan agreement on baseline net neutrality principles that protect Americans’ ability to access the entire Internet.”
The chairman is also facing resistance from within the FCC with commissioner Mignon Clyburn penning a blog post on the FCC’s website opposing the proposed repeal. In the post titled ‘The FCC Should Not Give Broadband Providers the Keys to Your Internet Freedom,’ Clyburn called on the Chairman to withdraw the scheduled vote as it would be harmful to many aspects of American lives. She said “the Chairman has chosen to take on more than a dozen actions this year that directly harm consumers and small businesses, including opening the door to massive media consolidation, and weakening a program designed to provide low-income Americans with affordable phone and broadband service. Nor is it the path we are heading on when it comes to net neutrality.”
In addition to the negative response towards the proposed vote, there is also a section lobbying for a delay of the vote because of alleged tampering of the public feedback process. The group composed of New York attorney general Eric Schneiderman, FCC commissioner Jessica Rosenworcel, and 28 senators are calling for the vote to be postponed in order to allow for adequate investigations into what Schneiderman called a “deeply corrupted” process.
Net Neutrality and Cryptocurrencies
If the vote goes through and the Internet is declassified as a utility, then there are legitimate concerns over the future treatment of small businesses, streaming services, and consumer protection online. But there are also worries over the fate of bitcoin and other cryptocurrencies.
People are able to buy and sell cryptocurrencies on exchanges over the Internet thus it is plausible that ISP’s may be able to use the repeal to affect some aspects of the cryptocurrency market. An ISP may block or slow down access to a site in favor of its preferred exchange, such as one that it is operating or restrict its access entirely due to political lobbying.
“The average person goes to Coinbase to buy Bitcoin, Ethereum, or Litecoin—the average on-ramp is an exchange, and those are easy to block. If Comcast is the monopoly provider in an area, the provider could decide there’s a preferred Bitcoin exchange.”
To avoid this, exchanges may have to resort to paying the Internet provider a premium in order to remain accessible. In addition, ISPs may be able to use this ability to stop the trading and usability of bitcoin and its counterparts thus effectively putting an end to the cryptocurrency market.
Furthermore, Internet providers may be able to affect the cryptocurrency space by affecting peer-to-peer interactions. Emin Gün Sirer, a computer science professor at Cornell University, believes “peer-to-peer applications may be greatly affected because they’re not in the top 100 most popular destinations on the web. Providers can make the case that supporting those non-top-100 services costs more, and users have to bear that cost. My worry is it will affect the ability to run your own node.” This would effectively make it difficult for cryptocurrencies to continue to operate since the blockchain works on the principle of decentralized peer-to-peer interaction.
If the vote does in fact happen and net neutrality is repealed, then it is quite plausible that there may be a marked effect on bitcoin as well as the overall cryptocurrency market in the United States.