An X post by Anita Posch warning about the risks of governments and institutions buying up large amounts of bitcoin went viral this week— even if just because of the trollish community note that appeared underneath it. I think the main concern here is that these big holders could influence the Bitcoin consensus rules to impose censorship.
When it comes to censorship specifically, mining centralization is actually a more direct threat. But if it’s just miners censoring, it would only last for as long as a majority of miners is willing to keep doing it— at the expense of forfeiting transaction fees. If and when the censorship stops, transactions would start confirming again as if nothing happened.
If economic nodes were to enforce censorship as new protocol rules as well, however, it can indeed be considered a soft fork. In this scenario, miners can’t revert from the censorship without splitting the blockchain between “upgraded” (censoring) and non-upgraded nodes; that would constitute a hard fork. Buyers and sellers of the two versions of bitcoin would then determine which blockchain is more valuable; this is why some bitcoiners are concerned about governments and other large institutions accumulating a significant share of the bitcoin supply.
It’s a reasonable concern, and something to be aware of. At the same time (and similar to my argument in this Take), it’s not obvious to me that governments or large institutions would be willing to risk it all by betting on a censorship fork of Bitcoin. But even more importantly, there isn’t much we can do to stop governments or other institutions from buying bitcoin anyways— nor should there be, as that would (ironically) itself represent a form of censorship.
The best countermeasure, in this regard, was actually already proposed by Nikolaus: Don’t sell MicroStrategy your bitcoin.
This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.