I read a story recently about a group of dandies who want to “help regulate Bitcoin, for its own good.” The thing about these guys is that they don’t really care about Bitcoin as a beautiful, disruptive technology or even for the great benefit it brings to mankind. Instead, they see Bitcoin as their ticket into the halls of the elite.
These people are not the agents of a new age. Rather, they’re trying to get into the upper levels of the old, hierarchical system.
When Charlie Shrem of BitInstant was arrested, these people jumped in on the side of the ruling elite, saying things like:
We were only passive investors in BitInstant, and we’ll do everything we can to help law enforcement. We fully support any and all governmental efforts. We want to ensure that money laundering requirements are enforced, and look forward to clear regulation being implemented on the purchase and sale of bitcoins.
First of all, none of these people – Bitcoin investors or government regulators – care anything about money laundering. When HSBC and Wachovia were caught red-handed, laundering hundreds of billions of dollars for violent drug cartels, no one was arrested. No one even lost their job! This talk about money laundering is nothing but theater for suckers.
Yet now, after holding no one accountable for laundering half a trillion dollars for the cartels, they found themselves with a chance to hurt Bitcoin – over a few million dollars of drug sales to peaceful users. So, they sent their goons to arrest poor Charlie Shrem (very publicly), who was positioned a full two steps away from the drug transactions in question.
And then, these elite wannabes – supposedly pro-Bitcoin – sucked up to the hypocritical ‘enforcers’ with everything they had. And I quote:
There are certainly a handful of folks that are hardcore libertarians (some anarchists) that believe that bitcoin should be completely unregulated, but I believe they are in the minority and, as a percentage of bitcoin believers, is shrinking very quickly.
In other words, “Please don’t think of us as anything but your faithful companions, our overlords.” It’s disgusting.
New or Old?
The people who are grasping for prestige from the old system are making themselves enemies of the new. This is not about money, you understand – the people I’m talking about are already wealthy. This is about their desire to stand in the highest levels of the ruling hierarchy. Once their heart has gone there, anything that threatens the old system threatens them, and they will end up fighting it.
What these people are trying to do, as best I can tell, is to form a new “smart wing” of the hierarchical elite, then to enlighten the world from that position. It seems like they still imagine themselves to be libertarians. But to get their new “smart wing of the elite” way, they have to minimize, discourage, or fight the authentic new way.
In an email, one of these dandies said that the crypto-anarchists who dominated Bitcoin were “getting left behind.” In fact, however, I think the truth will be just the opposite.
Crypto-currencies Will Survive; Fiat Currencies Will Not
It may seem very flamboyant of me to say that the dollar, the pound, the yen, the euro, and all the others are doomed, but it’s quite a very safe comment to make. Every fiat currency has crashed and burnt within a century or two, with no exceptions that I can point to. They’re all built upon a flawed model, and they all eventually go away.
Government money requires a large number of accountants, apologists, promoters, cooperative bankers, and supplemental players. It also requires violence – forcing people to use it. That is the essence of “legal tender” laws. If people don’t use the mandated currency, violence is applied.
Crypto-currencies, on the other hand, are based upon mathematics, something that will never go away. Beyond that, all that’s necessary are computers (which don’t seem in any danger of going away) and people who wish to make money by running them. This desire to make money is also rather unlikely to vanish.
So, on the one hand we have government money – a complex, expensive system that requires violence in order to survive. On the other, we have crypto-currency, a distributed system that operates just fine on a completely voluntary basis.
As a practical matter, crypto-currencies are more durable and more profitable for more people.
The War on Crypto-Currencies
Make no mistake: “Team Violence Money” is making war on “Team Voluntary Money.” Those of the old way either want to turn Bitcoin into a tool of their system or simply to kill it outright. Here is how those scenarios will likely play out:
The old way captures Bitcoin:
If the wannabe elites get their way, they will turn Bitcoin into a decentralized version of PayPal – a currency that requires full customer information in order to use. A fully controlled currency.
But if that happens (and it looks like it will take some time), there will still be a Bitcoin underground. Black-market Bitcoin will find a variety of ways to thrive beneath official Bitcoin.
The old way kills Bitcoin:
It the old way decides to use a lot of actual and coordinated violence, they may disrupt the Bitcoin market badly. They will have to do this more or less worldwide, which will not be easy – but if they cage enough people, they can probably pull it off.
There are electronic-based ways of hurting Bitcoin badly, but these will succeed only if Bitcoin users choose not to adapt.
That said, if Team Violence Money goes full Stalin, the weak and the cowardly will flee Bitcoin. The brave and the desperate will continue, of course, but Bitcoin will remain a shadow of its former self.
But even if that does happen, the idea of crypto-currency will remain, and new currencies will keep popping up.
Why? Because the genie is out of the bottle. At this point, anyone who has paid any attention knows that crypto-currencies work. That will never again be in doubt while history is recorded.
Furthermore, creating new crypto-currencies is almost trivial. And since mining these currencies can be highly profitable, there will be no shortage of hungry boys and girls willing to take a little risk.
In order to keep their fiat money systems intact, the operators of the old way will have to keep people very confused while making sure they never get interested in questions of truth or morality. Because if they do – and if they ever examine violence-based money – they will rebel against it.
So, even if they seem to win, the old way will never truly get past crypto-currencies.
Crypto-currencies are here to stay.