The Lawrence, Kansas Journal-World‘s Peter Hancock writes that US Senator Jerry Moran (R-KS) finds Bitcoin “a difficult subject” (“Senator says ‘Bitcoins’ are challenge for regulators,” November 25th). And in certain respects Moran is correct. Encrypted digital currencies do imply a technical learning curve for users (and presumably for creators).
It seems pretty obvious, though, that what has Moran bumfuzzled is his lack of control over Bitcoin. His main expressed concern is a distraction and a smoke screen. “Particularly as I learned about how the value fluctuates so radically,” he says, “there is great harm that can be had to a consumer in this virtual currency …”
That’s pretty rich coming from Moran, who represents an organization — the state — which harms consumers to the tune of somewhere in the neighborhood of half their earnings each year through taxation, regulation, currency manipulation and the periodic economic cataclysms produced by its ham-handed economic interventions. Moran’s real concern is that encrypted, digital, peer-to-peer currencies will thwart his and his cronies’ ability to tax, regulate, manipulate and wreck the economy.
Yes, the value of Bitcoin fluctuates relative to the values of various state-issued fiat currencies. In the past, some of those fluctuations have been a bit wild. A major exchange gets hacked, or its proprietors disappear with the customers’ accounts, or a government agency issues a scary bulletin, and prices crash before slowly climbing back up past their previous highs.
Those fluctuations seem to be getting milder and shorter in duration. In the last month or so, two major Asian Bitcoin exchanges have disappeared. The US government has arrested Ross Ulbricht, whom they allege to be “Dread Pirate Roberts,” proprietor of the underground “Silk Road” market. They’ve stolen a good deal of Bitcoin from Ulbricht, and have physical possession of a bunch more which they apparently can’t decrypt to steal. A year or even six months ago, these events would likely have resulted in major Bitcoin value crashes. Now they’re just minor hiccups.
More important than the wildness or tameness of Bitcoin fluctuations are their source: Those fluctuations are responses to real market conditions as perceived by those buying Bitcoin, selling Bitcoin and using Bitcoin in commerce. Yes, those market conditions will still reflect the existence of political skulduggery so long as we continue to allow the state to exist (which will hopefully be for not much longer), but Bitcoin is far less vulnerable than state-issued fiat currencies to the greed, the control fetishes and the ideological fantasies of the political class.
That’s what scares the bejabbers out of Jerry Moran — and he SHOULD be scared. Bitcoin may or may not be the “killer app” of government-proof money — for one thing, contra the Journal-World article and many others, no, it is not inherently anonymous — but that “killer app” is coming. And by killer, I mean state-killer. Soon (probably within this decade) it will be not just possible, but easy (nay, routine!) to earn, spend, invest and save one’s wealth without paying a rake-off to Uncle Sugar or keeping him informed of what you’re up to. At which point Jerry Moran will have to get an honest job. Or starve.