Cryptocurrency
by Martin on December 18th, 2017

What will be the impact of net neutrality on cryptocurrencies?

Last Thursday on the 14th December, the US Federal Communications Commission (FCC) voted to remove internet service providers (ISPs) from Title II regulations. The impact of the net neutrality decision is yet to be felt, but one area that might be negatively affected may be the crypto industry. Already, there are legitimate fears that the move may end up hurting various cryptocurrencies, and investors are already worrying.

What exactly is net neutrality?

The debate on net neutrality has to do with the right of ISPs to have control over the content being consumed on the internet. Prior to the most recent ruling by the FCC, the commission had classified internet services as a form of telecommunication rather than information. In so doing, the internet had a common carrier status, and ISPs would not be allowed to control the content being accessed, thus generating net neutrality.

Now that the 2015 ruling termed Title II has been removed, there is no longer net neutrality. What this now means is that ISPs will be able to control access to different websites depending on the ones they prefer. For example, if Netflix was to pay an ISP like Comcast, the ISP would throttle speeds to Netflix, but slow it down for other websites that don’t offer as much money.

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According to the current FCC chair Ajit Pai, he believes that net neutrality did not reflect the current economic status, and he pushed for a repeal of Title II. As he argues, the decision would allow for healthy competition between companies. For example, Netflix and Amazon Prime would have to compete against each other by paying the ISP to ensure network speeds would remain higher for them.

How does this affect cryptocurrencies?

Now let’s consider what this might mean for cryptocurrencies, especially the exchanges. The same way on-demand video companies like Netflix and Amazon Prime would have to pay the ISPs, so would the exchanges. Therefore, ISPs could reduce the network speeds for certain crypto exchanges in favour of others simply because one paid more than the other. That would favour the larger, more established companies with more money to pay and squeeze the startups out of the market, effectively creating oligopolies.

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There is also the fear that the move to end net neutrality could have a direct impact on cryptocurrencies if the government chose to do so. Imagine if the US government preferred to discourage certain cryptocurrencies, then they would just reduce speeds for a particular wallet. These are very real fears because they will turn the internet not into a free market but one where a few companies and parties can actually control what users can and cannot view freely.

By Martin

Martin is a professional trader with 3 years of working experience in a Cyprus-based brokerage. After the experience, he moved to the UK where he became a financial news reporter at a local news outlet. His years of trading experience help him deliver the most quality news, while also analyzing its impacts on various markets.

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