Last February, the New York Times editorial writer Joe Nocera raged against “The Bitcoin Blasphemy,” which he claimed was libertarian “sacrilege” since it is “unconnected to any currency or any government.” But try as they might, the leftist thought police at the Times that see bitcoin as an existential threat to “full faith” in the dollar and the U.S. government are failing.
A year later, bitcoin now has its own fully-funded 501C-4, and a lobbyist–Jerry Brito, formerly of the free-market Mercatus Center–to try to sway Congress and the Obama regulatory regime.
The bitcoin currency is hyper-competitive against the dollar, because it operates outside of Congress and the Federal Reserve’s ability to foster inflation as a scam to pilfer American’s wealth. Backed with a million dollars in industry cash, Jerry Brito launched the Coin Center in September. Its mission is to educate lawmakers and regulators about what bitcoin is and is not; perform policy research; and act as a cheerleader for bitcoin.
Since the Congress passed the Federal Reserve Act in 1913, inflation has destroyed over 96% of the value of the dollar. This has been accomplished through the Fed’s policy of fostering excess government debt to devalue the dollar and “negative real interest rates” to devalue savings by restricting how much banks to pay depositors interest rates that do not keeping up with the cost of living. As economist John Maynard Keynes said: “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”
There is a limit of 21 million on the total number of bitcoins that can ever be made available for transactions. Unlike on-line credit cards and PayPal type systems that allow buyers to claim their money back, bitcoin permanently transfers value. That explains why the numbers of businesses and organizations that accept bitcoins have grown by over 1000% from 3,797 to 44,000 in the last twelve months.
But like any shiny new toy, bitcoin has had up and downs. The exchange value into dollars was under $15 in 2013, traded up to $1,000 in 2014, and then came back down to earth and is quoted at about $233 today.
Last year according to the New York Magazine, Senator Joe Manchin, a West Virginia Democrat, called on federal regulators to ban bitcoin it outright. “The clear ends of Bitcoin for either transacting in illegal goods and services or speculative gambling make me weary [sic] of its use,” he wrote. “Before the U.S. gets too far behind the curve on this important topic, I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans.”
In response to Manchin’s letter, Representative Jared Polis (D-CO) sarcastically called for a ban on dollar bills. “The exchange of dollar bills, including high denomination bills, is currently unregulated and has allowed users to participate in illicit activity, while also being highly subject to forgery, theft, and loss,” he wrote. “I urge regulators to take immediate and appropriate action to limit the use of dollar bills.”
Congress generally understands that if it regulated bitcoin, it would just go offshore. But legislators and staff have real questions about the mechanics of the block chain that records ownership, and the huge amounts of transactions that are taking place digitally.
“Folks in Washington have heard about Bitcoin, and they understand it’s something they have to start paying attention to,” Brito told New York Magazine. “But they have the general public’s understanding of it.” Which Brito cautions is not very much.
The Bitcoin Foundation is backed by serious venture capital players, such as Falcon Global Capital. But MasterCard and other main-line transaction services see digital currency as carving out a significant piece of their market, and want to participate in what looks like a lucrative future for bitcoin.
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