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The Government Crackdown on Bitcoin

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This post The Government Crackdown on Bitcoin appeared first on Daily Reckoning.

Many advocates of bitcoin and other cryptocurrencies have a naïve belief that their digital assets are “beyond the reach of governments,” “cannot be traced” and “cannot be frozen or seized.”

But it’s really not true.

On Sept. 12, China announced that it was banning the launch of initial coin offerings (ICOs) in China and closing all Chinese bitcoin exchanges. The next day, it was reported that China demanded the books and records of those exchange customers and all transactions.

From there, it’s just a short step to arresting customers for violating foreign exchange and tax regulations in China.

The attack on bitcoin does not stop with China.

North Korea’s cyber-brigades have hacked into South Korean bitcoin exchanges both to steal customer bitcoins and demand bitcoin ransom to cease the attacks. North Korea is building up a bitcoin stash to pay for weapons and food as the U.S. ramps up sanctions on conventional banking channels.

This operation reflects the fact that using bitcoin on the dark web is a haven for criminals, arms dealers, tax evaders and state enemies of the U.S. How long will it be before the U.S. joins the effort to shut down, interdict and disrupt bitcoin message traffic on the dark web and the bitcoin exchanges themselves?

Bitcoin prices fell 40% in response to these and other developments before stabilizing to some extent. But it remains highly volatile.

Now, I said it last week, but I’ll say it again…

When it comes to cryptocurrencies like bitcoin, I take a laissez-faire approach. Do your own thing. If you want some bitcoin in your portfolio as part of a diversified bundle of assets, that’s up to you. If you want to speculate in some of the other lesser-known cryptocurrencies, that’s fine, too. You might make a lot of money.

My only advice is buyer beware. You need to take the time to understand how it works and what the risks are.

Governments enjoy a monopoly on money creation and they’re not about to surrender that monopoly to cryptocurrencies like bitcoin.

But governments know they cannot stop the technology platforms on which the cryptocurrencies are based. Blockchain technology has come too far to turn back. These are usually called the “blockchain,” but a more descriptive term now in wide use is “distributed ledger technology,” or DLT.

There’s no denying that fortunes have been made and still will be made in various DLT applications.

And while I’m not necessarily a fan of individual cryptocurrencies, I am a believer in this technology.

Governments don’t want to kill it; they want to control it.

They seek to do so using powers of regulation, taxation, investigation and ultimately more coercive powers, including arrest and imprisonment of individuals who refuse to obey government mandates with regard to blockchain.

As I also explained last week, blockchain depends on critical infrastructure, including servers, telecommunications networks, the banking system and the power grid, all of which are subject to government control, as the Chinese action shows.

That’s the back door governments will use to regulate and control the blockchain.

There’s something else to consider about cryptocurrencies…

If the power grid goes down for whatever reason (ask Puerto Rico after Hurricane Irma), good luck accessing your bitcoins. Bitcoin may have made you a millionaire on paper. But what good does it do if you can’t access it when you need it most?

People will always accept gold and silver in emergency situations. My advice is to stock up before the crisis strikes.

They will be unavailable once a crisis arrives.

I was actually singled out in this past Saturday’s New York Times for my advice on “how to survive the apocalypse.”

Holding gold, silver and other hard assets is definitely part of that plan.

Regards,

Jim Rickards
for The Daily Reckoning

The post The Government Crackdown on Bitcoin appeared first on Daily Reckoning.

This story originally appeared in the Daily Reckoning . The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.


Source: https://dailyreckoning.com/government-crackdown-bitcoin/


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    • joseph deka

      Mr Rickards,after following you a couple of years I’m seriously starting to question your real intentions. And they are not for the “common man” but for your financial elite friends. I am under the impression that Gold and Silver need to be promoted again as to fleece the owners again as in 2011. In France they say: L’histoire ce repete! Yo are promoting the SDR and Gold and Silver meme and bashing Crypto’s , where and whenever you can. Crypto’s are for criminal activities. No Mr Rickards, NO! Gold and Silver have always been used for and in clandestine operations. (Black) Money (fiat currencies0 HAVE BEEN MASSIVELY USED FOR CRIMINAL ACTIVITIES. THE WHOLE WAR ON SYRIA, is financed by digitally printed US Dollars. What are you talking about, Rickards. Keep your mouth SHUT, Rickards. You are the mouthpiece of the evil financial cabal, Rickards. Crypto’s are given to the people in these times of Aquarius. Transparency!! the Evil comes out in plain sight. The money printing, the stealing of pensions. That, Mr Rickards, is criminal!!! So are you as cursing on Crypto’s. That is the first currency, not printed on worthless paper. Not controlled by the financial criminal cabal. HONEST money, mr Rickards. Go to the bathroom and look yourself in the mirror. Mirror mirror ont the wall, who is the biggest deceptor of all?? Yes you Mr Rickards..

      • DK

        Far Far better than anything I could state myself, I have been following Daily Reckoning(also Bloomberg quoting Daily Reckoning) and some other posts and can find no other reliable reports from a) the Bank of China after its first anti Bitcoin rant in 2011 and b) I went to each exchange which would have had to post this news on its site i.e. relocation or closure. Nothing. However these articles come out exactly when the big banks make announcements on illegality of crypto or banning crypto as well as in concert with the peak of a pump and dump which has long led me to believe the scammers in the market sell at a loss to each other in alt coins to crash the market. Somehow after each dump the pump is rapidly primed once again and the only people confident enough to pump are those who can create money through a Hedge fund proxy. i.e. banks. BOC only bans renimbi to Bitcoin transactions via China bank accounts, it is not the Communist party of China, it gets to make directives on policy which can be voted on by the Communist Party. Thats it.

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