Posted by: DeepDotWeb November 26, 2013
At the time that these words are flowing from this keyboard, the bitcoin (BTC) has hit $839.48. Simply put, the BTC is perhaps one of the most volatile investments known to man. In the last few weeks, we have seen the good, winning-lottery-ticket-kind of volatility, but in the coming weeks, it could be bad, taking-prozac-because-I-just-lost-the-kids-college-tuition-fund-kind of volatility. That said, the BTC is still developing a cult following, where economic liberty seekers, speculators, and the downright curious are becoming absorbed into such a unique, new, and exciting concept.
The BTC not only carries with it an interesting concept of economics and philosophy, but it also seems to stir feelings of freedom. The big dogs don’t control it, they have problems tracking it, they can’t regulate it, and it’s so new of a phenomenon that most politicians think a ‘blockchain’ can be made using Legos.
However, there are rumblings that the BTC is more of a monster than a giver of freedom. Especially because the BTC has had a tendency to make ungodly price swings, and the fact that it isn’t regulated by some kind of central bank, has put quite a few economists on edge. They feel as if the BTC (or digital currencies like it) has the potential power to obliterate an economy …as if central banks also don’t possess such power.
These questions have culminated into a 3-month-long investigation, which came to the conclusion of a hearing: regulators, politicians, and economic leaders, all sitting in a room, talking about the bitcoin. According the The Guardian’s Alex Hern:
“The past weeks have seen a surprising meeting of minds between chairman of the US Federal Reserve Ben Bernanke, the Bank of England, the Olympic-rowing and Zuckerberg-bothering Winklevoss twins, and the US Department of Homeland Security. The connection? All have decided it’s time to take Bitcoin seriously.”
The meeting came to an interesting conclusion. Rather than seeking to regulate the currency, these heads of government and finance are more interested in controlling it, according to TheVerge.com. The question lies in the difference between ‘regulate’ and ‘control’. Interestingly, ‘regulation’ means that the BTC can be freely traded, but its value would be subject to taxes and laws. ‘Controlling’ the BTC means that they have little interest in allowing the cryptocurrency to continue as it is, and simply want the means by which to monitor, trace, track, and seize the peer-to-peer currency. It’s basically digital gold, and regulators are threatened by value that leaves very little paper trail back to a real identifiable person.
Why do they want to control it? Their reasoning is usually something along the lines of: “Well, because bad people use it to do bad things.” They usually site Silk Road, child pornography, and stop just short of extraterrestrial invaders.
However, the meeting came to another interesting conclusion in deciding whether or not to take major steps to control the currency: ‘Nah, we’re good.’
Why? They say that the BTC doesn’t pose as much of a threat, because cash is still the king of crime. This, at least, is what they claim.
However, with the BTC instigating such a paradigm shift, inciting such hatred among the establishment, and sparking such excitement among the tech-savvy underground, it doesn’t make much sense that regulators would simply let the delinquent currency run free.
Perhaps, it is simply not worth it. There are already two other cryptocurrencies waiting in the wings: Litecoin (LTC), and Feathercoin (FTC), being the two most popular younger sibs of the BTC. The BTC is over $800, but the LTC is at $9.6, and the FTC at just under $.50. Already, sources are saying that the LTC is not only seen as the ‘next big cryptocurrency’, but some are even using it as a hedge against the BTC’s volatility. Simply put, BTC watchers are already nervous about the fate of the four-year-old currency, and are already thinking about moving over to the LTC.
Thus, even if regulators establish an iron grip over the BTC, then everyone will simply shift over to the LTC, and then to the FTC, and who-knows-where after that. If regulators expect to regulate peer-to-peer digital currency, then there’s no point in stewing over the bitcoin. They will have to control cryptocurrency as a whole. According to Hern:
“So even if the currency of the future looks like Bitcoin, it might end up being a distant successor of the pioneer. “Is the technology of Bitcoin a window into the future?” asks Birch. “Yes. Is Bitcoin itself? No.’”
Controlling digital currency will certainly not be the result of a single hearing of big wigs, who feel threatened that little people have control over their own economic fates. It will not be the result of a single website being seized, and its upper echelons imprisoned. It won’t even be the result of some government, saying, ‘Hey, we’re not so fond of this. Please stop.’
No, total control of digital currency will have to be the result of a paradigm shift even more momentous than the creation of cryptocurrency itself. Whether the economic and government elite will find some pretext, by which they can implement control, is unknown. They will almost have to stiffly monitor all web-connected devices, define and outlaw cryptocurrency, or shut off electricity entirely in order to establish control. Other than that, regulating the world of peer-to-peer economics is like playing a nightmare game of whack-a-mole …but with a billion moles.