While the nations of the world are busy trying to regulate, tax, and dismiss the revolutionary innovation that the digital currency Bitcoin has provided the world, they’re also plotting and scheming. The world’s largest nations, banks, and corporations are using Bitcoin and its blockchain technology as a blueprint to raise their business models to the next level. This could mean disastrous things for Bitcoin, in the future, under one scenario.
One way this could go down
You may have heard the news yesterday that China successfully tested their own version of Bitcoin, pursuant to their own national digital currency, last month. Here are more details if you need an update on where this stands. I have known about China’s plans for a national digital currency since last January, when they announced it on their website, and had a meeting with Citibank and Deloitte about creating it. I have written about this before at BitConnect.
China almost needs a national digital currency, post haste, and here’s why. Simply, investors, speculators, and businesses are moving their money out of China, as their economy exits their boom market. The PBOC (People’s Bank of China, their national central bank) and the government are seeing great “capital flight,” and do not like it, and want it to stop. Many are using Bitcoin to execute these financial moves, as well because it is a superior, flexible form of money when it comes to speed and mobility, globally, plus it appreciates in value.
So China has fast-tracked this national currency project and said they would at that meeting one year ago. The United States, Australia, Canada, the United Kingdom and many other nations have either discussed this future changeover. It is only a matter of when, not if, this happens in most major countries, so this is not just about China. Here’s why.
The world will go digital currency for the same reason China puts their system in, first. Control. With a closed-network, central-bank controlled digital currency, it can solve a lot of problems the nation has created and the nation perceives as problems, going forward. It won’t be 10% of the digital currency value that Bitcoin is today, but it would be a great panacea for all of the state-managed ills. Here are just a few.
You can make as much currency as you want, limiting the effects of inflation. A digital currency doesn’t cost anything to print. It will need some cybersecurity, which nations and banks are struggling to handle, as we speak, but it will be much less expensive than safes and vaults and security teams and guns. Plus, you can monitor all transactions and people can’t leave your closed network with the national funds. Basically, The People rent out the national currency, and The State reserves the right to change the locks on you, for any reason, at any time.
This is the main reason. Every dollar, or Yen, or Yuan, is yours, and The People really have no money. The government and bank can co=opt the entire system, and decide who has money, who doesn’t, where they can use it, and produce mass surveillance over all transactions, in perpetuity.
This is a great system for control. Great system for surveillance. Every transaction you ever do, in this dystopian future, will be monitored, recorded, analyzed, and stored on a server that will either be monitored by The State, or hacked by a cybercriminal, Either way, you lose.
Unless……you work outside of their box and use a superior digital currency alternative, like Bitcoin. Which creates a problem for Bitcoin and its users.
Will you become an Enemy of the State?
This kind of makes you an enemy of the state, by default. The State can turn around and criminalize Bitcoin, or any altcoin that is not provided by The State, once they have their national closed-network system in place. They can attack exchanges, and make Bitcoin so hard to exchange and buy, through the laws they create and the regulations they levy, that Bitcoin could be rendered an outlaw.
Think cigarettes versus marijuana. Marijuana is really a superior cigarette. It has actual medicinal benefits, and has for hundreds of years, unlike cigarettes, which has just killed hundreds of thousands of people over the years and has never helped anyone. Like Bitcoin, 100 years ago or so, marijuana was seen as a cure-all for the ills of the day.
Before there were aspirin and penicillin, people used cannabis to resolve aches and pains and maladies, before it was criminalized, in Western culture anyway. I’m sure that corporations like the Bayers and Phillip Morris of the time had nothing to do with this.
The problem for marijuana was it was not sanctioned by The State, it is not taxed effectively by The State, and it is not produced by the fascist corporations of The State, so if you are seen using or selling marijuana, in certain countries, you may be in a lot of trouble with The State. No one was able to fight to protect a plant from being branded a criminal.
So why not take this market from the plant, even legalize a small amount of the plants use in your newly-approved corporate drug to make the new drug nice and addictive, and go forward with a backdoor deal, a kickback, and some new regs to prevent competition. Everybody is happy, except for the black kid in Michigan who gets 20 years for violating a “Rockefeller Law”
Bitcoin may end up becoming the marijuana of the 21st century. First, all of these states may make it a little tougher to use, via regulation, year after year. Make taxes for it nice and difficult, or nice and high, or both. Then, begin to slowly phase in criminalizing it, while copying its technology, making your own version, without 90% of the benefits. Your new national digital currency will have one thing Bitcoin may not have, in comparison. Convenience.
You can pay your taxes by smartphone. The store up the street will accept the national digital currency, but The State’s regulations on anything else will be so extensive, Bitcoin will not be widely accepted. People will use Bitcoin just like they use marijuana, in the shadows, behind closed doors, and with a dark cloud over their head, as they fight a silent battle against The State’s monopoly on transmitting value.
Call me a conspiracy theorist. I hope this dystopia does not come to fruition, but my charge is to consider all of the possible outcomes, report them to the greater Bitcoin community, and maybe have a discussion on how to protect Bitcoin’s future. Bitcoin can’t be beaten by a hacker or even a “51% attack.” The State has the best chance of defeating Bitcoin by making a Bitcoin-lite that helps the banks and the government, and makes the common man’s life just that little bit easier, but regulates Bitcoin into the cornfields and dark alleys of the world.
That card is on the table, and probably will always be on the table. Let’s at least recognize it and work together to plan a way to avoid that card being turned over.
As good as marijuana may be, the world really doesn’t use it, at scale, because its just not worth the hastle. Bitcoin is on that road. The road to regulatory ruin.
Part 2 is coming Monday, showing you how Bitcoin can actually live happily ever after