The loss due to internet shutdowns last year is estimated to be $2.4 bln. While internet access is taken for granted in today's connected world, various governments across the world have imposed internet shutdowns.

Costly Government Intervention

According to research by The Center for Technology Innovation at Brookings, shutdown of the internet, primarily short-term, by governments have caused an estimated loss of $2.4 bln last year due to loss of economic activity alone. If the secondary impact such as loss of investors, consumer confidence, taxes, etc. of internet shutdowns is considered, the loss would be much higher.  With expansion of the digital economy, the cost associated with internet shutdowns has increased over the years. Unfortunately, that doesn't seem to have deterred governments from imposing shutdowns.

Why do governments shut down the Internet?

Multiple reasons are cited by governments to shutdown the internet. Some of them include threats to national security, maintaining law and order, fighting terrorism, etc. Internet shutdowns are not restricted to dictatorships. For instance, the highest number of recorded occurrences of internet shutdowns took place in a flourishing democracy like India (22 instances). The shutdown of internet by governments has continued in spite of the United Nations Human Rights Council strongly condemning such measures. Since the resolution passed by the UNHRC in June 2016 to condemn online censorship and restricted access to the internet is non-binding in nature, there are no repercussions to violations by countries.

Would Bitcoin be Impacted?

Internet shutdowns are a short-term phenomena, with governments primarily using it as a stop-gap measure to control law and order. The costs of such measures are high with an estimated cost of approximately $1 bln to India alone last year. While Bitcoin transactions cannot be carried out during an internet shutdown, it is unlikely that a government would go to the extent of shutting down the internet just to contain Bitcoin. The target of the Great Chinese Firewall has been dissent on the internet, and not Bitcoin. This is in spite of the fact that Bitcoin can be used to circumvent capital controls imposed by the Chinese government. Bitcoin, and other cryptocurrencies, are not significant enough as of today for governments to target it by shutting down the internet.