How Crypto Markets will Undermine Government Control: Money

5 minute read

Posted by: Evan Faggart July 6, 2014

“The gun has been called the great equalizer… It ensures that the people are the equal of their government whenever that government forgets that it is servant and not master of the governed.”

            –Ronald Reagan

If the gun is the great equalizer, protecting the people from tyrannical government, then crypto-currency will be the next great equalizer by eliminating the very source of government tyranny. If a gun in the hands of an average citizen allows him to stave off the incessant advances by a government that is bent on obtaining totalitarian control and centrally planning every individual’s life, then Bitcoin in the hands of the average citizens of the world will make it impossible for any government to even attempt such gross violations of our individual rights. What a concept, fighting off government tyranny before it even starts! Bitcoin can work even better than a gun; governments can ban guns and forcefully remove them from the possessions of the citizens. They can do no such thing with Bitcoin. Crypto-currency is necessarily untraceable. Its decentralized nature makes it essentially impossible for anyone to find out who you are. The only information that is displayed in a Bitcoin transaction are the two addresses engaged in trade and the amount of bitcoins being sent. None of those things have any link to your personal information, given that you implement solid cybersecurity measures.

Why is decentralized money such a devastating weapon against governments when wielded by individuals operating in the free market? Because money is the source of all government power. Governments attain all things through their monopoly on the issuance of money and the control of its supply. Some may say that it is not the government’s monetary monopoly that gives it such power, but that it is in fact the government’s monopoly on violence that gives it power. Without a monopoly on violence, governments would never be able to establish a monopoly over the money supply of its nation. But a monopoly on violence presupposes total control over the country’s money. Violence requires bodies, weapons, and transportation. None of those things can be conjured from thin air. But money can be, when put in the hands of the government. When in a monopolistic position over the issuance and supply of money, a government can alter the production structure in any way it deems beneficial to itself. Enormous contracts to military-grade weapons manufacturers so that they can go to war, subsidies to businesses that will benefit them, and handouts to special interest groups so that they will get reelected. All the government has to do to acquire the money for these things is sell an infinite amount of treasuries to the central bank, who will then create infinite amounts of money from thin air, at the expense of the average person.

Governments do not need a monopoly on violence to establish a monopoly on money. That monopoly is voluntarily given to them by the citizens under their rule. Due to a tacit assumption that there should be only one prevailing currency in each country, and that those currencies must be controlled by the governments, the citizens automatically assume that their governments must monopolize the supply of money. So they hand that power over to the government willingly, without being extorted by the government with a threat of violence. Once the government has control over the money, then they can establish their monopoly control of violence. Fire up the printing press, run deficits, and build armies to suppress the people, should they dissent. In the meantime, business cycles are produced because of inflation and the people suffer. And the people have no escape; the citizens are bound to their governments by their currencies.

Money is the strongest chain that ties individuals to governments. Break that chain, and the government loses all of its power. Threats of violence mean nothing if the government cannot pay anyone to carry those threats out. The government cannot throw anyone in prison if they cannot afford to fund the prison. Decentralize the money supply and the government becomes nothing more than a small group of angry old men stomping their feet and making empty threats. Decentralizing the money supply, Bitcoin does just that.

If Bitcoin becomes widely adopted, it will be impossible for governments to print however much money that is required for them to fund their violent escapades. Their revenue will be restricted to only what they can bring in from “legitimate” taxes. But, given that Bitcoin gives extreme anonymity to its users, it will become next to impossible for governments to actually collect even the “legitimate” taxes authorized by their constitutions. With the power of compulsory taxation taken away from them by the very nature of Bitcoin, the governments will only be able to survive through voluntary donations from people who value the services the governments provide. Governments then would have to actually satisfy people in order to make money; if the people do not like the quality of the services the government provides, they can pay another firm to provide the same services at a better quality. The government will, in effect, become nothing more than a private business competing with other firms on the free market. The reign of totalitarianism and central planning will be over. This historical paradigm shift will come from a seemingly mundane market activity. There will be no guns, no explosives, and no blood. People will not take up arms and violently remove their governments from power. They will just start using a different currency, one that cannot be controlled by any government.

Naturally, governments will try to rid decentralized currency from the world so that they can maintain their dominance over the money supply. China, for instance, has already been actively working to remove Bitcoin from its country by implementing a number of unsuccessful bans on Bitcoin. A government will not be able to ban something if they cannot realistically enforce the ban. A simple prohibition of Bitcoin will not suffice, the inherent anonymity of Bitcoin removes much of the risk involved in using illicit goods. So the governments would have to go after the technology itself. The only way to get rid of the blockchain technology completely would be to get rid of all computers and smartphones. What a task it would be, if a government were arrogant enough to attempt such a thing! It is quite humorous to imagine a situation in which a government attempted to confiscate every single computer and smartphone within its boundaries. It is an impossible task.

Governments will never be able to completely rid the world of decentralized currency, now that it has been unleashed. The only thing standing between the oppression of the people and the starvation of the State is the wide acceptance of Bitcoin. The spread of Bitcoin must be encouraged and facilitated through education and social activism. Decentralized currency can be successful only if the people choose to use it. If they do so, they will liberate themselves. Crypto-currency is the next, and final, great equalizer.

Updated: 2014-07-06