A joke for you, Fellow Reckoner: How many Senators does it take to change a light bulb? Oh, wait, we’ve got a better one: How many Senators does it take to dismantle a cryptographically secured, completely decentralized, Peer-to-Peer (P2P) network of voluntary, free market traders exchanging goods and services across six continents using tens, perhaps hundreds, of thousands of individual computers and some of the most advanced cyber technology and software coding known to date?
Answer: we don’t know…but Senators Charles Schumer (D, New York) and Joe Manchin (D, West Virginia), seemingly immune to common ignominy, have taken on the challenge anyway.
Your editor has no idea of the cybercryptography aptitude of the two senators but, as with most endeavors undertaken by politicians in the name of “your own damned good,” practical experience and a sufficient understanding of the issue at hand are rarely prerequisites for intervention, again, “on your (unsolicited) behalf.”
The two erstwhile wonks took to the presses this week, demanding something be done about one particular free-market affront to authority.
We are referring, of course, to the latest furor surrounding bitcoin, a P2P cyber currency setting the virtual – and, some would argue, actual – world ablaze. (We first brought you the story a couple of weeks ago, when bitcoins were trading for roughly B$1 = US$7.5. As of this morning, they’ve shot up to B$1 = US$31.5. See “An Emerging Free Market Currency” and “How Governments Distort the Value of Money” for a “bit” of background about them and about the pitfalls of government-backed currencies in general.)
Long story short, bitcoin is a limited supply, decentralized digital currency; a free market alternative to state issued notes and coins. As such, it poses a direct – though entirely non-violent – threat to the state’s monopoly on counterfeiting. This, cry the powers that be, must not be tolerated. Of course, before any politico can act, they must first have a distraction, a fall boy, a pretense, a reason for rescuing us from the horror that is our own decision-making capacity. We picked it in that first column, the relevant portion of which is reprised here:
Another cause for concern among bitcoin skeptics is that, as the economy of the free market currency expands it will inevitably begin posing a threat to the state’s own money-printing racket. It will, thereby, raise the ire of bankers and politicians who will have every incentive to make the currency illegal in order that they may protect their own monopoly and continue cheating their citizens of the value of their president-stamped notes and coins. Given the state’s nature when it comes to these matters (and here we refer readers to the recent and despicable case against Bernard von NotHaus) there is every reason to expect that it will indeed crack down…and hard.
Here we expect all the usual arguments from all the usual suspects: “Bitcoin transactions are anonymous and therefore provide cover for peddlers of child pornography and drug traffickers,” they will contend.
But the astute reader knows in his gut there is something very wrong with this line of thinking right from the beginning. Cash is anonymous too. People by things deemed illegal by the state with state-issued currency all the time. So what? Does this mean US dollars should be banned? Some people drive their cars recklessly, with little or no regard for their own safety or for others’. Should we ban cars?
The question, however, is not whether the Feds should do something (moral considerations have rarely, if ever, stopped them before), but whether they could do something, even if they wanted to…
Now that we have a little background, let’s get back to those busybody senators. As one might imagine, a virtually untraceable currency – such as bitocin or…umm…CASH! – might find use as a medium of exchange to purchase both white and black market products like, say, drugs. Such was the case with Silk Road, a website where users (literally) can buy illegal substances with bitcoin.
Said Senator Chuck of Silk Road and bitcoin in a news conference on Sunday:
“Literally, it allows buyers and users to sell illegal drugs online, including heroin, cocaine, and meth, and users do sell by hiding their identities through a program that makes them virtually untraceable.” Apparently, the senator wants Silk Road shut down immediately with bitcoin, no doubt, soon to follow. The pair have written to Attorney General Eric Holder and the DEA asking that action be taken to crackdown on Silk Road.
Now that the pair have their straw man, we can be sure it will be used as a pretense to attack free-market currencies themselves. Stay tuned as the story unfolds on that front…
For now, we wonder what users of bitcoin are to do now that the self-appointed invigilators of free market activity are on their case? Well, for the past few weeks at least, they’ve been rejoicing. The currency has almost quadrupled in value since the Silk Road issue came to the fore.
Bitcoin enthusiasts may wish, therefore, to thank Senators Schumer and Manchin for, without their commitment to proffering illogical, largely ignorant remarks in the nation’s mainstream press, bitcoin might have taken a while longer to reach the critical mass on which it must now surely be verging. “Bravo, Senators,” we can almost here the cyber underground chorus, “Thanks for the free publicity!”
Joel Bowmanfor The Daily Reckoning
Joel Bowman is managing editor of The Daily Reckoning. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.
Bravo Joel for another great article… and free publicity
Well if they Use SWAT teams to arrest those that aren’t paying their student loans (Stockton CA) I’d hate to venture what they’ll use to arrest bitcoin users once it is made illegal…Maybe they’ll get to use those sawed off shotguns the Federal Dept of Education purchased! Cooool….
The politicians are on a fool’s errand.
These marketplaces, of which Silk Road is just one of thousands, only exist in cyberspace. The sites are hosted in jurisdictions out of reach from Chucky Schumer and his fellow clowns.
The medium of exchange is likewise entirely digital, oftentimes based in the clouds.
When users access the sites, conduct business, and communicate via secure, encrypted, and untraceable means, there’s not much for the Statists to do except watch their beloved expiriments in tyranny crumble from within.
ah. suddenly it is all clear. bitcoins is about buying drugs and porn. why does all the talk about freedom and cyberspace and dodging tyranny always devolve down to buying drugs and porn?
I mean, you’re not using bitcoins to pay your rent or buy groceries, are you? it’s all clear now. yep.
I’m no fan of schumer, but thanks for giving him something to do. it will distract him from more serious issues.
- The Silk Road -
This will also be the first real test of the TOR Hidden Services security, and bitcoin. Bitcoins can be anonymous too if you use them correctly. Like if you mine & spend your bitcoins through a proxy or TOR your bitcoins are anonymous.
ahh. suddenly it is all clear. bitcoins is about buying drugs and porn. why does all the talk about freedom and cyberspace and dodging tyranny always devolve down to drugs and porn?
I mean, you’re not using bitcoins to pay your rent or buy groceries, are you? it’s all clear now. yepper.
I ain’ no fan of schumer, but thanks for giving him something to do. it will distract him from more serious issues.
“I’d hate to venture what they’ll use to arrest bitcoin users once it is made illegal…”
Errr thats the point, it is a devolved p2p network that is anonymous.
“We are referring, of course, to the latest furor surrounding bitcoin, a P2P cyber currency setting the virtual – and, some would argue, actual – world ablaze. (We first brought you the story a couple of weeks ago, when bitcoins were trading for roughly B$1 = US$7.5. As of this morning, they’ve shot up to B$1 = US$31.5″
That is great run up. Good time to sell and get out.
Ron Paul sez that they’re are not enough competing currencies. BitCoin too is created out of thin air like the dollar. But, it has appreciated greatly against it. BitCoin is also much more transparent in it’s creation and distribution than the dollar. So, market forces have driven BitCoin’s value up and the dollar is on it’s way down, due to FedGov.Inc’s (note domain suffix) mega mismanagement. Destroying BitCoin isn’t going to save the mortally wounded dollar Hmmm, having a few BitCoin might be a good idea.
I don’t trust the entire concept of Bitcoins; there is no physical “coin” to take possession of, its existence depends entirely on computer programs which can be easily MANIPULATED and WORST of all, it seems to be managed by AMERICANS, who are arguably the BIGGEST FRAUDSTERS ON THE ENTIRE PLANET.
No siree, give ME precious metals that I can throw on top of my bed and ROLL AROUND IN!!!
When BitCoin INEVITABLY winds-up ripping off naive ‘investors’, good luck trying to PROVE the existence of your “savings” when it comes time to take someone to COURT.
“that makes them virtually untraceable” – It’s definitely not untraceable. There is a global, digitally signed record of every transaction for all to see. Anyone using Bitcoins to buy narcotics is an idiot.
By calling a cybercurrency a “free market” device or contraption you have manifested your total ignorance of classical economics. According to Adam Smith, the free markety encompassed the production sale and consumption of goods and services. Manufacture of the means of exchange (i.e. currency) is NOT a market activity but a META-market activity that must be tightly regulated either by government or by some body that must answer for its acts to the community at large. Currency is no ordinary merchandise, any more than are weights and balances. Next thing you’ll be calling policer work a free-market activity.
@ A Nal
You obviously have not done your homework on Bitcoins. Please read more than one article before posting ignorant, misinformed posts.
To fully appreciate the size and growth of the bitcoin economy, one has to see all the items that may be purchased with the currency. A couple sites now show an aggregation of merchandise and services from various services. It is clear that one can buy almost anything with bitcoins.
For example, check out searchbitcoin.com or bitcoinbulletin.com
Au contraire my fraudulent American friend, it’s YOU that needs to look MORECAREFULLY into ShytCoin ..er…I mean, “BitCoin”.
Why BitCoin? Because there’s STILL a svcker being born every minute, THAT’S why.
The whole BitCoin concept is not only a scam unto itself, but it is also ALREADY being used by OTHERS to run mini-scams within it.
Like the ones discussed in this BTC users forum.
BEWARE: NO LIFE GUARD ON DUTY!
@A Nal: Newsflash! Scam artists use currency!
If anything, it is just another indication of how valuable Bitcoin is.
The value of bitcoins is now collapsing. The article stated US$31/btc. It’s now US$21/btc and falling. Any speculator getting in at the top of the market has just lost 1/3 of their money.
DR. GIZMO- the bit coin will “monetize the net” it is the most exciting thing to happen since the browser, this and its ilk is/are the “climax” app that will change everything, a open transparent system, mathematically honest, and ultimately the best way to Business on the web, The new emerging “tip jar” (pay what you like) what it is worth to you” economy. This is sooooooooooo big!
If I can’t put it in a coffee can and hide it in my attic, I don’t want it.
Indeed. There is a svcker born every minute.
Anybody interested in buying a bridge?
Bitcoin: Another American attempt to perfect the ultimate PONZI SCHEME.
Sometimes I think the rest of humanity should put a giant FENCE around the entire United States of America and declare it a MAXIMUM SECURITY PRISON.
Thank you for covering this story on your site. I hope EVERYONE will bring this story to the attention of every person on the planet.
Well the Bush’s and Clintons can’t have you encroaching on their lucrative drug trade monopoly and the Jews at the FED certainly are’t going to allow any challenges to their monopoly on destroying the dollar. Free market? Where? China?
The bitcoin crash seems to have been ‘arranged’ by someone like Chase (JP Morgan).
“Bitcoin market hacked, crashes to below $0.01 per bitcoin”
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