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I found this article on the independent headlined: Bitcoin: “Government to regulate cryptocurrency to avoid money laundering, says Treasury“, which I couldn’t help but comment on. What I found most annoying about the article was the total lack of comment regarding the underlying story.
It’s not the concept of increased security which bothers me. Of course I think that there should be checks to prevent criminal behaviour infiltrating the system. What made me laugh is the failings of the current regulatory system with regards to tackling criminal behaviour including; Fraud, Libor Fraud, PPI Fraud, Exchange Rate Fraud, Mexican Drug Cartel Money Laundering and Accepting money from known supporters of Terrorist organisations.
The banking institutions which were involved in these activities were given a small, token fine, and nobody was prosecuted. They were allowed to carry on as if nothing had happened. And we the public are being conditioned to see mass market fraud as nothing serious, while minor benefit fraud is touted as a jailable offence. PPI Fraud was renamed PPI mis-selling. Mis-selling? Call a spade a spade. The banks ripped us off, knowingly in a massive fraud, and they got away with it scott-free. NOT. ONE. SINGLE. PROSECUTION.
Why would the Treasury be interested in regulating Bitcoin? Banks and big business are in cahoots with the Treasury and so can pretty much do as they please; all sort of criminal behaviour is accepted with little more than a shake of the head and a strong exhalation through the nose.
Also, banks are the current intermediaries of exchange. HM Treasury uses them to extract wealth in the form of taxation from the population. The banks take their cut of course. If you have a job, you need a bank account, and that bank account is where your salary (minus tax and NI) is deposited.
If people started to use a medium of exchange which suited them, like Bitcoin, then two things are going to change:
1. The Treasury has no longer got an eye on your tax affairs. So any ‘bitcoin tax’ you pay is your own business.
2. The banks themselves are redundant. They no longer receive their cut as the middleman in the deal, and wither and die. They may be talking about forming their own cryptocurrencies, but why would anyone use one of their (presumably expensive) systems, when bitcoin is a free P2P service, which effectively removes: banking fees, exchange rates fees, transactional fees or transfer fees.
What is funny is the system of Bitcoin is far more transparent than the current system. The Blockchain denotes the existence of the currency, and the transactions are listed and recorded, unlike the current system of banking.
Who Gets to Choose the Means of Exchange?
I had a thought when I was reading the original article when it said
In a discussion paper published in February, the Bank of England said that digital currencies such as bitcoin showed “considerable promise” and that they showed it was possible to transfer value securely without a trusted third party.
The trusted third party is, supposedly, the bank. Ha! The Bank of England of course would become effectively redundant if bitcoin and other cryptocurrencies where introduced as mainstream means of exchange. While the bank of England may have an opinion on the subject, like its interest in what is a legal tender, but at the end of the day, they don’t get to choose.
They are entrenched in the current fiat money system, because their paper money is what we are currently using as currency. But we could put our faith in some other means of exchange like Bitcoin, and really there’s very little they can do about it.
What’s Good about (Bit)coins?
It may be a fabricated currency, backed by nothing, but it does have value as a means of exchange:
- Unlike fiat currency, there is a maximum amount of bitcoins to be created (21m Bitcoins in around 2033). This is written into the bitcoin code.
- Bitcoins are transparent and ownership and transactions are registered on the blockchain
- Bitcoins are commission free across national borders
- Bitcoin transfers incur a very low, effectively free, transfer fee (0.0000009%)
The government can say what they like, if we the people choose to use a particular means of exchange, we will and there is nothing they can do about it. The current monetary system is dying, and when it does finally keel over, a new means of exchange is sought, one which is more efficient, reliable, and un-inflatable.
Bright cookie, Stefan Molyneux from freedomain radio, explains more about Bitcoin and its significance.
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