When Is The Government Going To Shut Down Bitcoin?

Michael Snyder is the publisher of The
Economic Collapse Blog, The American Dream Blog and The Truth.
You can follow him on Twitter right here

Do you actually believe that the central banks of the world are going to sit back and do nothing while their monopoly over money creation is being threatened?  Do you actually believe that the governments of the world are going to allow a digital currency that they have no control over to become “the future of money”?  If so, then you are incredibly naive.  Wars have been started over much less.  The global elite are very, very sensitive when it comes to the creation of money, and Bitcoin has definitely gotten their attention.  Yes, there have always been alternative currencies created by local communities, but none of those has ever been a real threat to the central banks of the world.  The truth is that Bitcoin is different.  It has the potential to really be something, and I expect a serious move to be made against Bitcoin before it explodes in popularity.  If Bitcoin was solely a domestic currency, the U.S. government would have already shut it down long ago.  The fact that it is a decentralized international currency makes things trickier, but without a doubt right now officials are thinking of ways to restrict the use of Bitcoin or shut it down altogether.  Bitcoin is already being portrayed as a currency that attracts criminals involved in such things as tax evasion, drug dealing, gambling, terrorism and money laundering.  In fact, the Wall Street Journal recently reported that the Treasury Department has ruled that money laundering rules will be applied to Bitcoin.  But this is just the beginning.

At some point, the establishment will bring out the big guns.  It is only a matter of time.  And there are already some major banks that are shutting down the accounts of Bitcoin dealers.  Just check out what is happening up in Canada…

Virtex, based in Calgary, is an online market that matches Bitcoin buyers with sellers, with about $13-million of trades under its belt.

But earlier this month Royal Bank of Canada quietly informed Mr. David that it would no longer do business with his company.

“They shut down our account without any reason,” said Mr. David, an ebullient entrepreneur with a background in technology companies. “They just said we have the right to refuse service to whomever we wish.”

For whatever reason, many in Canada’s small but fast growing Bitcoin community are suddenly dealing with the same problem: The banks have decided they don’t like the cryptocurrency and they’re shutting down some of the accounts of businesses that deal in it.

An isolated incident?

Perhaps.

But many of those that are closely associated with Bitcoin know that they are being closely monitored.  They know that bankers and government officials are watching them.  Just check out what Jeff Berwick of The Dollar Vigilante recently had to say…

If there is one thing that my involvement with BitcoinATM has shown me very plainly in the last month is that bitcoin has the direct attention of the governments, central banks and banks.  It took them nearly two decades to figure out the internet would be their downfall.  In this case, it has only taken them months to realize that bitcoin could end their monopoly on money and banking.

And they aren’t watching because they like what they see.

Rather, they are watching because they see a threat that needs to be stamped out.

Robert Wenzel of the Economic Policy Journal recently suggested how they will attempt to do this…

I continue to believe that the point of vulnerability for Bitcoin remains the point of exchange between bitcoins and other currencies. I fully expect government to make a massive shutdown of these exchanges at some point.

And I agree with him.  I believe that a day will come when those exchanges will be shut down.  The powers that be just have to figure out how to sell it to the public.

So what will happen to Bitcoin once those exchanges are shut down?  The following is from a recent article by Max Keiser…

Here’s a thought exercise. What if all bitcoin exchanges were shut down by various governments? What would the current value of a bitcoin be? This is an important question because of the implied outcome of the current trend by governments to shut down — or prevent the creation of — bitcoin exchanges.

The mining of bitcoin would continue but spending them becomes a problem since there would be no quoted price. The bitcoin protocol is about mining bitcoin not pricing bitcoin. There is nothing in the protocol about establishing a market price for bitcoin; you need a market for that, but what if all the exchange markets are shut down?

And already we are starting to see Bitcoin being demonized in the mainstream media.  For example, the following is a brief excerpt from a recent CNN article about Bitcoin…

No one really knows who is really behind Bitcoins, as the creator is just a pseudonym Satoshi Nakamoto. That in itself should be a huge red flag. I would certainly not trust my life savings to some mysterious computer algorithm created by shadowy anonymous characters in a system that attracts underworld types.

One of the self-proclaimed largest Bitcoin exchanges is Mt. Gox. The name originally stood for Magic: The Gathering Exchange, an online site designed to trade cards used in playing the card game popular with the younger set. An exchange based on trading kiddy cards does not seem like a sound foundation for a monetary system.

There is no government regulating participants in the system to prevent fraud and abuse. I would not be surprised if the Bitcoin mining software becomes a magnet for computer viruses. After all, the tax evaders, drug dealers and terrorists attracted to Bitcoin would not be likely to cooperate with authorities when they have been hacked and robbed.

It would be close to the perfect crime to create a pseudomonetary system that rips off other evildoers. Just be careful when the bad guys find out where you live.

And without a doubt, Bitcoin is a very, very unstable currency.  Just a few days ago a Bitcoin was going for around $150.  Now it has dropped below $100.

But I applaud the creators of Bitcoin for trying to come up with an alternative digital currency that actually works.  As I have written about over and over, the Federal Reserve and the other central banks around the globe need to be abolished.  They have trapped humanity in a debt-based monetary system that systematically drains our wealth.

We desperately need an alternative.

Unfortunately, I don’t believe that Bitcoin is going to be the solution.  At some point, the establishment is going to step in and try to shut down Bitcoin.  When that occurs, what is going to happen to all of the time, money and effort that people have put into the Bitcoin system?

Michael Snyder is the publisher of The
Economic Collapse Blog, The American Dream Blog and The Truth.
You can follow him on Twitter right here