Wednesday, December 13, 2017

The Anarcho-Capitalist Case for Supporting the Government Smashing of Bitcoin and Other E-Currencies

This is certainly going to be a controversial piece but I want to point out that I am writing this from a realpolitik perspective rather than the ideal goal of a Private Property Society.

As things stand now, we are not in a PPS but face a very aggressive government.

In my view, e-currencies are very trackable and the news out of Australia supports the fear I have of where digital currency trends are headed. Governments are not going to allow Bitcoin or other non-central bank e-currencies to take over as the main means of exchange.

If central banks begin to understand the powerful tool e-currencies are for control, they will create their own e-currencies that will be able to track every transaction we make. In this fashion, they would be setting up a turnkey system that under a totalitarian regime could even prevent us from buying books or other goods or services that the government doesn't want us to have.

A central bank digital currency, in other words, is a very dangerous, very powerful, totalitarian tool.

I do not believe most in government policy positions, at this point in time, understand how powerful of a tool of control a government-controlled e-currency would be.

Thus, I believe from a realpolitik perspective of keeping us freer, I would rather see government crush Bitcoin and other current e-currencies now rather than when and if Bitcoin jumps the shark and becomes an actual means of exchange. At such time, the government would act to quash Bitcoin and other e-currencies and be more likely to introduce their own trackable e-currency, which could be used in a very totalitarian fashion.

In other words, I expect Bitcoin and other e-currencies to get crushed by government, one way or another, sometime in the future. I would rather see it happen now so that it doesn't further educate statists on how an e-currency could work in general exchange. Let them kill it out now and hope that it kills their focus on e-currencies and the idea that they should launch their own.



Also see: A Further Note on Realpolitik Strategy


  1. Robert, what you seem to be saying is that anytime there is a new product that can have a dual use, one to take on the state and one to be used by the state, we should hope for its destruction. Shouldn't we celebrate attempts to get around the state and make its life harder (see my related comment at your Australia story post)? I also think you're short-changing those in power; if they're sufficiently aware of the power of Bitcoin to want to stamp it out, why wouldn't they also be sufficiently aware of the power of using it (just as they were sufficiently aware of the possibilities with the Internet to develop electronic surveillance)?

    Using your logic, we should have cheered for the state to stamp out firearm ownership when firearms were first being accumulated by private citizens, before those at the state came to realize that they themselves could use firearms to enforce their edicts. I for one am glad that there are 200-300 million privately held firearms in the US.

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    2. Sherlock, your point on guns may not stand up if the Feds or states ever get a real gun registry going (which Hawaii already has).

      In any event, my dual use point is not limited to guns. As I noted over at the other posting on the Australian central bank, the Internet is also a dual use technology/infrastructure with tremendous benefits for the state as well as for private citizens. Do any of us wish that the state had stamped out private use of the Web early on just because the state could eventually use it to surveil us?

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    4. The design of bitcoin and those like it is to record all transactions. As such I don't think it is dual use at all but its design. It was never designed to be private, there was just a claim that a person couldn't be tied to his account. A claim that turned out to be as false as many knew it would turn out to be. Regardless an account's transactions being recorded were never in question.

      It's not dual use, the monitoring and eventually control of individual transactions was baked into the cake from the get go. Always there to be used by whomever had the power and access to use it.

    5. JJM, by "dual use" I mean able to be used to fight the state as well as useful for the state (to reduce liberty). Bitcoin was designed as an alternative to state money (and the state's banking system), and state money is the lifeblood of the welfare/warfare state. The fact that the state would want to restrict or prohibit it is proof of this very fact.

      Yes, the public ledger and transaction tracking was intentional, but this was for the purpose of verification to ensure integrity and counter the "double-spending problem," thereby giving Bitcoin a decent shot at acting as a credible, non-state payment system. Yes, it can be used by the state to track transactions. Hence the "dual use" description.

    6. "Bitcoin was designed as an alternative to state money"

      How do you know that? Because that is what we are told? It seems like someone designed the ultimate in state money to me. The state simply needs people to become accustomed to it and then take it over formally.

      "The fact that the state would want to restrict or prohibit it is proof of this very fact."

      Then why haven't they killed it already? They killed those overpriced rounds called the "Liberty Dollar" with hardly any adoption by anyone and stretching the law to do so. They just showed up in force and took the gold and silver.

      The ledger can be used to track transactions period. This is a feature that is useful to many, not just the state. Additionally the entire point of a currency based on energy is just too much like the ideal of technocracy to be ignored. Technocracy, the management of society by state experts, is what we are being progressed towards for the last century or so.

      Bitcoin's design is just too convenient for the state and the goals of those who control it.

    7. JJM, certainly I've heard the theory that the US government designed Bitcoin for its own purposes. And I can see how one could form that view. Does that mean you believe that the thousands of miners globally are in cahoots with the US government (if you know about this history, wouldn't they too)? Also, why would the US government go to the trouble of creating the other 1,323 crypto-currencies too? Does this theory allow that any of those other technologies could be a legitimate, private alternative to state money?

    8. The "conspiracy theorist" counter attack of random questions is non-responsive. I could ask you a series of random questions that are worded to imply certain views upon you as well but that wouldn't be productive.

      You are arguing that bitcoin and its kin are non-state money. I am arguing that they very much fit the desires of the state and that is why the state has not stomped them out thus far. That the state benefits from their acceptance and will eventually take control. It serves power and control freakism. It serves the left and right progressives' goals.

      Many things the state does were not designed by the state, merely used by it. Long before regulation there were privately controlled industry standards. How did the government regulate the automobile industry? It copied SAE and other standards called their copy FMVSS, leveraged its monopoly on legal violence, and then proclaimed it granted americans safe cars. Why would the state not want to do this with bitcoin and the like? Why would it not do it?

      Even by the time FMVSS was created it was already a long standing pattern for government to simply take over something which served its purposes.

      How can crypto-currencies be a legitimate, private alternative to state money when they serve the purposes of the state? They are less private than state issued cash. They are more dependent on state controlled and state regulated infrastructure than cash. The only advantage to counterbalance these and other state advantages is digital portability. Not exactly a good trade.

    9. JJM, I'm confused about what you're saying. Are you saying that crypto-currencies were designed as an alternative to state money or they were not? I was talking about why they came into being, you seem to be talking about what might happen in the future.

      I thought digital currencies had other beneficial features too.
      Cash is attached to the physical holder, whereas crypto-currencies are attached to a public key which has to be reconciled with an individual's name (someone has to do the work to identify that individual; moreover, some, like Dash, are trying to better conceal even the public key, and who knows what technological developments will ensue in the future). Cash can be seized quickly via the cops on the highway or raiding your house; not sure this is true of crytpo-currencies. Cash is withdrawn from and deposited into the global banking system, which is a much more state-controlled infrastructure than the Internet. Like gold, a crypto-currency is a global currency accepted across borders vs. having to convert into each fiat currency. Transaction processing is quicker than wiring money. For something like Bitcoin, there is a finite supply.

      I don't understand why we wouldn't cheer attempts to stay one step ahead of the state. The state will always chase things like this, but I'm counting on human ingenuity to keep trying to put distance between the state and the private citizen.

    10. They aren't an alternative to state money, they are the next generation of it, or at least the prototype there of. Energy based with every transaction recorded. This is what technocracy needs to advance further.

      It's already been proven that government can determine who was involved in transactions of their interest. That's all government cares about in the present. However the basic set up could eventually allow fine control of the economy.

      Governments have seized considerable sums of crypto currencies. They can do it physically. They seize your devices or the devices of the third party where your 'wallet' is. Or they can do it remotely once they are running the digital currency game. They may be able to do so now for all I know.

      I am not making an argument regarding ease of use or utility for cross-boarder transactions. I am making the argument that these digital currencies are exactly what the state needs, serves the state's purposes. Everything from negative interest rates to tracking every transaction to manage society and more. It's a tool that gets them to their goals. The more people adopt it, the better it is for the state in the end.

  2. As with any new technology of this magnitude, it's an extremely sharp double edged sword. I'm hopeful that Bitcoin is not the end all be all of e-currency (definitely not of blockchain) and that newer applications of the technology solve the privacy paradox problem in Bitcoin.

  3. "In other words, I expect Bitcoin and other e-currencies to get crushed by government, one way or another, sometime in the future. I would rather see it happen now so that it doesn't further educate statists on how an e-currency could work in general exchange."

    Unfortunately, I think that ship has sailed. When even Venezuela seriously considers establishing a digital currency(the "petro") you know we're all in trouble.(from a tracking standpoint at least)

    Simply on it's face, tying a digital currency to a tangible asset like oil, in my subjective opinion, gives it more potential opportunity for adoption/faith. Coupled with government force(legal tender laws)- government based digital currencies could quickly dominate the digital currency market IMO.

    Sure, they'll do the same thing governments have been doing for thousands of years:

    1. Tie the currency to a valued commodity
    2. Establish it firmly to it's monopolized region
    3. Debase it after people are totally invested, whether it's 1 month, 1 year, or 100 years down the road.

    The difference is that by tying it to a commodity and then implementing legal tender laws on government's local tax cattle they have an immediately means by which become more competitive with digital currency markets.

    I've always been intrigued with Bitcoiner's claim that governments can't stop Bitcoin and I'll be fascinated to see how that claim plays out over time- the #1 reason people IMO Bitcoin appeals to people is for tax avoidance and #2 is the philanthropic notion of fighting against currency debasement. While both are noble causes, governments aren't going to roll over and allow this to occur without putting up a fight and I'm not convinced at this stage that there aren't enough government resources at hand to make using Bitcoin or other such non-state sanctioned digital currencies so difficult and risky to use that they can't squash it at will when they get serious about doing so.

    Further, rarely discussed but equally important is that when quantum computers are one day "reality" instead of theory, well, that's the day Bitcoin "ends":