How The United States Is Working To Ban Bitcoin & Why It Doesn't Matter

[Editor's Note: The following post is by TDV Editor-in-Chief, Jeff Berwick]

Dinosaurs will die. And decentralized systems – like bitcoin and 3D printing and even WordPress – are the asteroid which will ensure just this.

I’ve been doing a lot of thinking, and I simply don’t think totalitarianism can withstand the global political awakening we see taking shape before our very eyes.

Things are changing on Planet Earth. I can tell because the dinosaurs are getting desperate.

The United States as whole looks a whole lot to me like the German Democratic Republic (East Germany) did during its existence. My head researcher Justin O’Connell and I were just talking about how the wall fell, and he cleared some things up for me I wasn’t 100% sure about. He will be writing an article on that in the coming week…

Let’s just say, the things he and I talked about, in regards to the German Democratic Republic (GDR), look a whole lot like the US of today. Like the GDR, the US constantly looks bad in the world media. It also looks a bit behind the times…

And it’s politicians make (or try to make) similar totalitarian decrees as the former German Democratic Republic counterparts. 

When I read that Senator Joe Manchin (D-W.Va.) called for a ban on bitcoin, I laughed out loud. Obviously, this guy has no idea what he is talking about, and obviously he has deep psychological issues which force him to want to control…things. I can’t wait until he learns that you can print a gun using 3D printing.

He wrote a letter. Or likely an assistant wrote a letter. Maybe it took a few assistants and Manchin to write the letter, since we all know the state of US public education.

Anyway, “he” addressed it to the Treasury, Federal Reserve, and multiple financial regulatory agencies, saying that bitcoin and digital currencies are “disruptive to our economy.” If he had to direct this anywhere, he really should have directed this at Congress, since that is where the power is supposed to lie in Washington, D.C. 

Here is most of the text in italics, with my comments in regular font.

Dear Secretary Lew, Chairwoman Yellen, Commissioner Curry, Acting Chairman Wetjen, Chairman Gruenberg, Chairwoman White:

I write today to express my concerns about Bitcoin. This virtual currency is currently unregulated…

FALSE: Already Manchin has stated something false. Bitcoin is regulated. What else could one deduce from criminal charges being brought against Charlie Shrem, Mt. Gox & Dread Pirate Roberts? High profile cases have been solved, making public agencies look good. The feds should be celebrating the success they’ve had bringing computer nerds to “justice.” Bitcoin is value, and when it is transacted, it is subject to basically all the same taxes and laws, etc., as real money. And just like gold and silver, you don’t pay taxes on the gains until you sell the bitcoins for fiat. His letter continues:

…[Bitcoin] has allowed users to participate in illicit activity, while also being highly unstable and disruptive to our economy.

FALSE: We’ve heard the illicit activity spiel before. Bitcoin is less anonymous than cash. Further, bitcoin has not disrupted the US economy one bit. The entire bitcoin market has yet to reach more than $14.5 billion in market cap. The Federal Reserve prints out of thin air $85 billion and invests that into the pockets of banksters and war-mongerers. That is called disruptive to an economy. And he continues some more:

For the reasons outlined below, I urge regulators to take appropriate action to limit the abilities of this highly unstable currency.

FALSE: Bitcoin is not a currency. This is a highly subjective disposition on what bitcoin is. Bitcoin is technology. Decentralized digital currencies go beyond our historical understanding of what money is. Please continue, Sen. Manchin:

By way of background, Bitcoin is a crypto-currency that has gained notoriety in recent months due to its rising exchange value and relation to illegal transactions. Each Bitcoin is defined by a public address and a private key, thus Bitcoin is not only a token of value but also a method for transferring that value. It also means that Bitcoin provides a unique digital fingerprint, which allows for anonymous and irreversible transactions.

FALSE: Again, bitcoin does not allow for anonymous transactions like cash does. And what the heck is a “digital fingerprint” if bitcoin is so anonymous? Doesn’t a fingerprint make something not anonymous? As our very own Jim Karger says, bitcoin has built-in FATCA controls, meaning that it is not really that anonymous at all nor hard for agencies like the National Security Agency, etc., to detect. But, please continue Sen. Manchin with your half-truths (at best):

The very features that make Bitcoin attractive to some also attract criminals who are able to disguise their actions from law enforcement. Due to Bitcoin’s anonymity, the virtual market has been extremely susceptible to hackers and scam artists stealing millions from Bitcoins users. Anonymity combined with Bitcoin’s ability to finalize transactions quickly, makes it very difficult, if not impossible, to reverse fraudulent transactions.

FALSE: Bitcoin is not anonymous. Again, not nearly as anonymous as cash. His logic here could be applied to, say, the Target database hack, in which millions of credit card numbers were exposed to hackers. So, let’s get rid of credit card payments too, while we’re at it, since they pose such a risk.

Manchin goes on:

…more than a handful of countries, and their banking systems, have cautioned against the use of Bitcoin. Indeed, it has been banned in two different countries—Thailand and China—and South Korea stated that it will not recognize Bitcoin as a legitimate currency.

It’s good to see US leaders looking up to free societies, like China and Thailand, to set policy.

Several other countries, including the European Union, have issued warnings to Bitcoin users as their respective governments consider options for regulating or banning its use entirely.

FALSE: None of the EU countries have moved to ban bitcoin. Yes, Europe acknowledged bitcoins’ existence, and said there were some risks, but world leaders like Germany and Finland have accepted bitcoin, realizing it is already part of the country’s regulatory regime, and said it is legal tender. Instead, Senator Manchin wishes to keep the US in the industrial revolution. Senator Manchin would prefer the college graduates in the US, saddled by $1 trillion in debt, stay indebted instead of innovating.

While it is disappointing that the world leader and epicenter of the banking industry will only follow suit instead of making policy, it is high time that the United States heed our allies’ warnings.

FALSE: Okay, this guy really doesn’t know what he is talking about. The United States has been a world leader in imprisoning bitcoiners. Nowhere in the world are bitcoiners less free than in the US. Moreover, the US’s allies have not come out against bitcoin nor have they come anywhere as close as the US to banning it.

I am most concerned that as Bitcoin is inevitably banned in other countries, Americans will be left holding the bag on a valueless currency.

Although I don’t belong to any tax farmer, Manchin, I know lots of US-based bitcoiners, and what’s likely is they are more suited for the future than you are. They can handle their own finances. Many of them have way more money than you (aside from kickbacks you might receive).

All it takes is simple due dilligence on the behalf of one of your tax cattle for them to protect themselves from making a mistake in the bitcoin ecosystem, such as banking at a failing company like Mt. Gox. You’re stuck in the past. Many of us have moved onto the future. I’d implore you to move on into it, as well, but something tells me it’s too late for you…

Our foreign counterparts have already understood the wide range of problems even with Bitcoin’s legitimate uses – from its significant price fluctuations to its deflationary nature.

WHAT FOREIGN COUNTERPARTS, MR. MANCHIN? Are you really still talking about China and Thailand? Because the US’s closest allies, like Germany and Canada, have not been nearly as draconian towards bitcoin as the United States. Even the United Kingdom has been more open to bitcoin than the US. These countries are not scaring businesses and talent away. You are limiting economic opportunities for an American people that has been fleeced since the 2008 banking crisis. People like you are the problem.

…There is no doubt average American consumers stand to lose by transacting in Bitcoin.

The majority of US bitcoiners, Mr. Manchin, have won by using bitcoin. Except for those thrown in cages by busybody regulators. You’re ignoring reality.

Luckily, I wasn’t the only one to notice Manchin’s ignorance. Yellen stated a day after the Manchin letter on bitcoin that the Federal Reserve had no authority to regulate bitcoin. She said Congress should look into it. The Bitcoin Foundation wrote an understanding letter to the senator. Perhaps too understanding, but I understand why they put it the way they did. 

Ultimately, there is one thing to take away from Manchin’s letter: uncreative control freaks are in control of governments. This means the only true way to protect oneself is not through bitcoin, but via diversification into various assets: foreign real estate, gold, silver, and yes even bitcoins. The 21st century is not the time to be an idealogue (like Manchin). Solutions abound for us to free ourselves economically. At this point, if the United States banned bitcoin, then bitcoiners would leave the US en masse, voting not only with their private and public keys, but with their feet as well. That’s a right, Mr. Manchin, you will have to work much harder to strip away.