So, the government has come for Bitcoin. There are hints, if not real information, about why the government is choosing this moment to go after Mt. Gox. First, there is the wild price surge during the Cypress financial crisis last month that really put Bitcoin on everyone’s map. This has had the effect of causing people to start adopting Bitcoin more. It also made regulators sense danger to their monopoly. What they do not understand, they fear. What they fear, they hit with a hammer.
Then there is the lawsuit filed by Coinlab against Mt. Gox for a whopping 75 million dollars. That, along with the cryptic nature of the currency itself, was sure to draw the attention of regulators. It was just this month that we got word that Bart Chilton of the Commodities Futures Trading Commission was seeking for ways to regulate Bitcoin.
Then there is the fact that Bitcoin, because of its very nature, is being used by the underworld to move or launder money. Scams have already been reported of various sorts. Why can’t you buy Bitcoin with a credit card? Because Bitcoin transactions are not reversible and credit cards and PayPal can be charged back. Expect a lot of hyperbole in the coming months and years about how Bitcoin is a haven for criminals and terrorists. This will be a hammer they will use against the currency.
What is the real reason for attacks against Bitcoin? In fact, a little regulation and oversight would be a good thing. Bitcoin should be transparent and in the light. Companies that deal in Bitcoin should be held to an ethical standard and be held accountable if they act inappropriately. Even with a decentralized, digital currency, people should be able to deal in it with a feeling of trust and security. If the regulators were coming in with that in mind, I would be cheering them.
But that’s not what is going to happen. They are coming to try to shut Bitcoin down. Governments are the playpen of the wealthy, and they have the current wealth system locked up. Real wages have been stagnant for most of us for 40 years. Infrastructure has been cut to the point that in some states people are asked to donate for the upkeep of local roads. Benefits for the best of us have skyrocketed and the rest of us are left to wonder how we are going to keep it together.
And they like it that way. And they know that Bitcoin will not be controllable to the same extent, or at least in the same way, as national monies are. And that scares them. So, they will use their enormous influence in the halls of power to try to stamp Bitcoin out.
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And they will fail. They will fail just as they have failed to stamp out torrents. The very nature of internet and the currency will prevent them.
Which isn’t to say that they can’t do it great damage. Bitcoin will have to have a meteoric rise before it can really be considered a currency alongside other world currencies. If they shut down any way to trade Bitcoin in the US, it will grow outside the US. The US will try to get partner states to go after it as well, but they will never really be able to get a handle on it. At this point, it may truly become a currency for the underworld. But it will not die.
And then there will be a financial crisis, or a political one, or a natural one that causes runs on national currencies. And Bitcoin will be there absorbing it all. At this point it will turn out that millions of people, including many of the people we thought hated Bitcoin, and many corporations, had been hedging their bets by keeping money in Bitcoin.
And Bitcoin will emerge from the darkness. It will come into its own. It may not happen this way, and in fact I will be working to make sure that Bitcoin does not need to go through “wilderness years” before becoming a generally accepted currency.
I hope you will too.