Net Neutrality Once Again Threatens Weak Spot for Bitcoin

A decision to allow the strangling of web relationships may break net neutrality for the US market and affect Bitcoin.

Net neutrality, the idea that connections and requests should be free from assigned weights or tampering, has received a major blow on the US market. Besides the general inconvenience, the cryptocurrency community fears the move against net neutrality by the US Federal Communications Commission may harm Bitcoin. 

The most direct way this could happen is to hamper the connections to exchanges, as well as some wallet services, or tie them up with premium plans. The final vote on a Bill on net neutrality is expected this Thursday.

At the moment, Coinbase is the most visited entry point for US-based buyers of Bitcoin, Litecoin or Ethereum.

The most widely prevalent fear is that internet service providers would get the right to fast-lane some content, while also having the option to throttle sites and connections. At the moment, this may mean less access to cryptocurrency exchanges, as well as other sites that in effect receive a shadow ban. At the same time, ISPs would offer larger bandwidth with premium packages for live stream video. 

The question of net neutrality has been linked to the fate of Bitcoin for years, but now the threat is once again at a serious level. The threat is still hypothetical, but connections to exchanges may turn into a point of contention. At this point, the price of Bitcoin has risen so sharply that even small factors may start to shake down confidence.

"We need the US government to regulate the internet about as much as we need the EU to regulate Google — I suspect the cons greatly outweigh the pros," said Peter Thiel in a question session for GigaOm, founder of PayPal and early Bitcoin adopter.

While Bitcoin itself does not require much bandwidth, the spreading knowledge of how transactions work may change the approach to directing the traffic, possibly targeting connections and transactions to important points in the Bitcoin ecosystem.

Indirectly, the repealing of net neutrality may harm startup companies with niche services, leading to a letter of protest. Startups complained to the FCC in a letter from a few months ago: 

"We also depend on an open Internet—including enforceable net neutrality rules that ensure big cable companies can’t discriminate against people like us. We’re deeply concerned with your intention to undo the existing legal framework."