There has been a lot of talk recently about the busts of Liberty Reserve, the closing of the Mt. Gox Dwolla account, and the subsequent upgrade in verification requirements at Mt. Gox.
It is important to remember that bitcoin is still in its infancy and in many ways is an experiment. By its very nature, it is going to be hard to kill bitcoin, but it will be easy for governments to vilify it and force it into the shadows. The government has the power of self-fulfilling prophecy. If they say that bitcoin is nothing but a currency for criminals, through propaganda and pressure, they can turn it into just that.
Those of us who are promoting bitcoin for whatever reason have a need to be the adults in the room. Personally, I have entered into bitcoin not because of its potential to create a libertarian paradise or to hide all of my activities from government. I feel that bitcoin is a critique and may, perhaps, be a remedy for some of the problems that plague the American political system.
Right now there is a tremendous concentrating of power in the hands of the government and the wealthy classes. We see abuses all around that center around the concentration of money aided by banks and governmental monetary policy. The regulators are in bed with the banks and no one is looking out for the regular person.
Bitcoin adds some uncertainty to that system. It adds that libertarian strain, that bit of chaos that the government cannot quite control. It does this naturally, by its very nature. So bitcoin does not need people banging drums saying that it will create a libertarian paradise (it won’t), it needs people who talk rationally and responsibly about what bitcoin is and the role it fills into today’s world.
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Some of those roles include:
- With the abuses of the big banks, a way to take better control of our own finances. No more ATM fees, credit card fees, or any of the hundred ways they nickel and dime the little guy.
- No real inflation: There is a hard cap on the money supply and no central control of the currency which will prevent it from being manipulated like national currencies. When bitcoin finds its level in relation to the other world currencies, it will inflate in relation to the value of the world economy.
- More equality: When bitcoin caps out, we will find out for real the value of an hour of work in the US and Bangladesh.
- A way to send money domestically and internationally without being at the mercy of large financial intuitions.
- A way to pass money hand to hand without carrying cash – the advantages of cash without having to carry the cash.
- It is truly an international currency that cannot be controlled by any government or agency.
- An investment strategy for millions who have seen their futures placed on hold by the excesses of others that will return them to their homes, allow them to educate their children, and to provide a secure retirement.
There are more, of course, and disadvantages too. Most of the disadvantages have to do with overcoming a fear of the technical and insubstantial and with the perception that what is new and strange is bad. Both of these will be overcome in time.
Bitcoin has a bright future and we are on the crest of the wave.
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