Western governments claim that they promote freedom in the world. They call themselves "democratic" and "liberal".

Well, Bitcoin could help them with that mission. Above all in today's times that authoritarianism is on the rise again.

But they seem to chose to not do so, but instead they try to eliminate Bitcoin's main freedom-providing feature: censorship resistance.

An example: Bitcoin is one of the few ways to fund opposition movements in authoritarian countries. It's unlikely dictators can detect these Bitcoin transactions if they use well known privacy techniques, like CoinJoins, mixers and non-KYC services. Most dictatorship cut off other (fiat) sources, only cash may still work but is a hassle.

But where should these movements spend the money donated to them, if no exchange or merchant accepts their coins, because they are "high risk" and linked to "suspicious" services?

Another example: People in democracies are protected by strict privacy protection laws. Nevertheless, a lot of services thought to be "safe" were hacked in the past, even government-owned data was massively stolen. Thieves use these data for identity theft.

Bitcoin could solve that problem because in contrast to banks and services like PayPal, it is a way to transact money privately without having to store personal data on some server due to KYC requirements. With these KYC requirements, western governments put their citizens in danger to be victims of serious crimes. They also restrict their freedom to buy everything they want (which in 99% of all cases is not illegal stuff) with nobody having insight to the transactions. Because due to the FATF travel rule, many transactions, their originators and beneficiaries are also stored on servers. And if somebody hacks that data and connects them in the right way, everybody can see what you bought.

"Money laundering", "sanctions evasion" and "terrorist financing" are the excuses used by the anti-privacy governments. But available statistics about that issue show that cryptocurrencies are a very minor tool for money launderers, compared to the vast options provided by fiat money. Cryptocurrencies do not even provide what money launderers most want: "clean" money. Privacy services like mixers only are able to blur some tracks. But they can never provide "clean" money, only "cryptocurrencies of uncertain origin." They are maybe useful for small criminals, but not for the "big fishes".

Thus: Western governments should re-think their stance about cryptocurrency privacy. If they want to fight authoritarian dictatorships, they should not treat their citizens like them. Instead, they should respect their freedom to transact privately.

(That also is valid for governments which are not part of the classic definition of the "West", but claim to promote similar democratic values, like Japan, India, South Korea, South Africa etc.)