Geoblock

A geoblock, sometimes called an IP block, is a security mechanism used by cryptocurrency exchanges and crypto applications and services that limits access to those services based on the location of the user.

A simple example of a geoblock that many of you living in the U.S. have probably faced is when you try to sign up for an account at a crypto exchange based outside of the U.S. in a foreign country.

The crypto exchange has made the decision to operate outside of the regulations imposed by various U.S. government agencies, and in doing so, can’t offer its services to users connecting to the exchange from within the U.S.

Geoblocks implemented by crypto services like crypto exchanges usually block entire countries from connecting to their websites or mobile applications.

These blocks are accomplished by comparing a user’s IP address to a list of allowed and not allowed IP addresses.

IP addresses identify a person’s location in the world, and crypto services can use that information to block specific locations by country, region, state, city, or even just an individual IP address.

While geoblocks are easy to implement and generally keep away users from specific countries who aren’t allowed to access a company’s services, geoblocks can be easily worked around.

Virtual private network (VPN) connections can be used to mask your true location in the world, rendering geoblocks useless.

While VPN connections and services have become pretty mainstream, crypto companies are aware of the technology and now actively block the IP addresses of the VPN nodes and servers.

It’s a cat-and-mouse game, with new VPN providers appearing from all over the world, and crypto companies quickly working to block more IP addresses.

Crypto exchanges, specifically, are now requiring more personal information during registration that can be used to screen the user.

Requirements like a copy of your passport or a utility bill that includes your country of residence or home address are used as secondary filters for a user’s location. These requirements somewhat reduce the benefit of using a VPN connection to circumvent geoblocks.

Decentralized cryptocurrency exchanges (DEX) are hoping to gain more users by marketing the fact that they don’t require KYC information to register for an account. DEXs simply require that you connect using a funded crypto wallet to swap currencies or make a trade.

Related Terms

Genesis Block

The very first block or first few blocks recorded on a blockchain or blockchain-based protocol. The genesis block is often called Block 0 or Block 1. The genesis block sets the foundation for the rest of the blocks that are added to form a chain of blocks. That’s where we get the word “blockchain”. The most famous genesis block, and the very first Bitcoin block, called the Genesis Block, was created on January 3rd, 2009, by Bitcoin’s infamous and mysterious creator, Satoshi Nakamoto. Some consider this date to be the start of the cryptocurrency revolution – the start of it all!

Wallet Address

A unique string of letters and numbers that represents a wallet, exchange, or blockchain address. This identifier (unique from every other address on the planet) serves as the virtual street address for the specific currency on that currency’s blockchain.

Blockchain

Blockchain networks are at the heart of cryptocurrencies. A blockchain is a database, or digital ledger, made up of a series of interconnected blocks containing transaction data created on the network over some period of time. Each block in a blockchain also contains a unique identifier unlike any other block in the chain called a hash. Think of the hash as a fingerprint identifying that block for all other blocks. Distributed ledger technology (DLT) is another name frequently used in relation to blockchains.

Pseudonymity

In blockchain security, the pseudonymous nature of certain blockchains keeps a network user’s identity hidden from other network users while still linking all of the transactions made by that person to a pseudonymous identity that CAN be tracked by almost anyone.

Peer-to-Peer (P2P)

Describes the sharing of data or assets between 2 or more parties without any central authority making the transaction happen. P2P exchanges tend to offer transactions that are censorship resistant, cheap, private, and secure.