The Future of Bitcoin¶
The latest guidance from US Leviathan’s Financial Crimes Enforcement Network (FinCEN) is a leaf ripped straight out of Moldbuggian prophecy. The target acquisition revealed in Administrators and Exchangers of Virtual Currency, section c. De-Centralized Virtual Currencies could not possibly be clearer:
A final type of convertible virtual currency activity involves a de-centralized convertible virtual currency (1) that has no central repository and no single administrator, and (2) that persons may obtain by their own computing or manufacturing effort.
A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter. By contrast, a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter. In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency.
[See Fotrkd’s link feast in this comment thread]
RIP Bitcoin, I think Moldbug confirms:
I have not of course seen the questionnaire [for money transmitter licenses], but I imagine it asks you how you know the monies you’re transmitting are not the product of illegal activity. Of course, Bitcoin provides no such assurance. By design. That’s because it’s well-designed — for a free country that doesn’t exist.
With licenses unobtainable, and unlicensed monetary transactions proscribed, Bitcoin price-discovery has been criminalized. The conclusion: Bitcoin no longer has a practically meaningful US$ exchange rate, which is equivalent, in fact, to having a yet undiscovered (but already implicit) value of US$0. The cliff edge has been crossed, and all that remains is the impact.
Empirically vulnerable predictions are pure gold, and this is an especially precious example. The fate of Bitcoin tests the real power of the State, the practicability of economic controls, and all political theories — whether reactionary or progressive — which subordinate market dynamics to more fundamental levels of social order. If Bitcoin does soon die, it will have been demonstrated that government can effectively dominate the economic sphere, dictate price, and eradicate commerce, under conditions which are — in at least some important respects — extremely challenging. Freedom might still seem attractive, but it will have been shown to be puny.
Alternatively, if Bitcoin survives, and spreads, the Right’s libertarian current will be vitalized. These types will not only find their analytical models reinforced, but the sovereign insubordination of markets will have been dramatically evidenced, the State humiliated and weakened, and an archetypal anarcho-capitalist institution entrenched. Interesting times.
ADDED: Eli Dourado
argues
that anonymity is the “real target”:
Contrary to some popular accounts, Bitcoin is not completely
anonymous, but pseudonymous. The entire Bitcoin ledger is publicly
shared so that the same coins can’t be spent twice. Bitcoin
“mixers” take coins from multiple pseudonymous actors, shuffle
them around, and return them to their original users under new
pseudonyms. In other words, mixers help anonymize a system that is
not truly anonymous.
If the government were to succeed in regulating mixers, it would
not destroy Bitcoin as a payment mechanism or even hurt Bitcoin’s
price, which has now reached an all-time high of $60, but it would
ruin one of the chief advantages of using it—the quasi-anonymity
that it affords.
ADDED: Meanwhile, in Europe …