The Govt. Realized Bitcoin Could Not Be Shut down, Says U.S. Federal Prosecutor
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For the index please go here. The idea of a stateless digital currency is radical. It has never been done before; gold is the the original stateless currency but gold is not digital. Like any radical innovation, Bitcoin is greeted with lots of narratives that explain why this can never happen.
Desire does not equal capability; I want to run a 4 minute mile but I cannot do so. I think good government is a good thing. Bad government is obviously can bitcoin be shut down bad thing fascism, communism.
Then we move on to look at four things that worry governments about bitcoin and how these worries can be addressed. For a long time, entrepreneurs faced competition and regulators sent them the rule book. The regulators now face real competition because their political masters have to keep citizens happy and citizens care about jobs and GDP growth.
Both Fintech upstarts and incumbent global banks are increasingly mobile; so jobs can disappear fast if regulators get it wrong. Plus, innovation is the primary driver of productivity which drives GDP per capita.
Pity the poor regulator who must balance that with protecting citizens from fraud and enforcing existing laws. Jurisdictional competition explains why no single government can stop bitcoin. This becomes a vicious circle — less trust leads to more controls, which leads to less trust, which….
In some countries it is already game over for the Fiat currency which became useless due to hyperinflation — think Zimbabwe and Venezuela. Many narratives put hyperinflation firmly in the past and talk about the pre Hitler Weimar Republic in Germany yet hyperinflation is also very real today.
There is no clear definition of hyperinflation vs high inflation, but that is largely academic if you live in these countries. If you face the prospect of hyperinflation, you would be prudent to seek alternative stores of value whether that be gold or bitcoin or some tangible commodity. Usually the three are related i.
These countries are worried about capital flight and bitcoin makes capital flight easier, so government desire to ban bitcoin is can bitcoin be shut down as is their citizens desire for bitcoin. When the ingenuity of millions of citizens meets bureaucratic controls, you can usually bet on the millions winning. A study at investing. The African continent has many countries with weak currencies and weak democracies.
Derided as tax havens in the past, many are now re-positioning to attract cryptocurrency entrepreneurs. They have little to lose and a lot to gain. They have to make sure their country is not perceived as a haven for tax evaders, money launderers and other bad actors. They are primarily concerned with how people outside their country use cryptocurrency.
If other countries adopt overly restrictive regulations, cryptocurrency activity will move to these hubs. They have a natural role as a place to locate exchanges, mining and vaults.
These countries also often have strong currencies and strong democracies. Take Switzerland as an example. The Swiss love their currency. It has historically been a strong store of value; so bitcoin does not appear like a threat. Because of an unusual bit of history which Daily Fintech first learned about in in GenevaSwitzerland is officially a multi-currency country.
Does that sound familiar? This is no threat to the national currency, which Swiss people trust. However it does help to position Switzerland as a hub for cryptocurrency innovation and Switzerland is obviously more than an offshore hub; it is also a talent magnet and good can bitcoin be shut down to run a global business and a reasonably sized but super-conservative local market.
Switzerland also has strong privacy laws, which was the driver for the pretty dramatic news of a Silicon Valley company moving to Europe, reversing the can bitcoin be shut down flow of entrepreneurs from Europe to Silicon Valley Xapo story on Daily Fintech is here.
It is no surprise that Switzerland ranks 1 in the Global Innovation Index. In an update that speaks to the jurisdictional competition theme, Xapo now list their HQ as Hong Kong.
Another country with a strong currency, strong democracy and a history of innovation that is very welcoming to bitcoin is Japan. However China is also a big and dynamic economy and a big player in bitcoin, so the government is a bit conflicted in how to deal with it. America has the current reserve currency and has been the locus of innovation in the past, but is hobbled by battles between States New York and California have very different points of view on bitcoin as well can bitcoin be shut down a dysfunctional and bitterly divisive political landscape.
The European Union could take a leadership role because of a leadership vacuum left by both America and China. All the superpowers struggle with competing agendas protecting citizens and incumbents vs fostering innovation. Two other countries with significant can bitcoin be shut down that face confusion and competing agendas can bitcoin be shut down to bitcoin are:. Not if you enforce existing laws such as segregated accounts the issue behind Mt Gox and many traditional financial services frauds and securities laws.
Not if you avoid the can bitcoin be shut down to inflate away your currency. The issue is not bitcoin. How will we collect tax? Treat bitcoin as an asset and tax the capital gains. That is simple and most countries already do this.
Will anonymous cryptocurrencies be used for illegal activities? Yes, but so will can bitcoin be shut down Fiat currency; there will always be suitcases of cash in dark alleys. Zero illegal transactions is clearly an impossible goal. These are 3 types of news stories that get issued by government PR but which we do not report on during our weekly news roundup about Blockchain, Bitcoin and Crypto where we have a self-imposed restriction of only 3 news items a week:.
Bernard Lunn is a Fintech deal-maker, authoradviser and thought-leader. You can reach out directly to discuss our advisory services by sending an email to julia at dailyfintech dot com.
Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email. You are commenting using your WordPress. You are commenting using your Twitter account. You are commenting using your Facebook account.
Notify me of new comments via email. February 3, February 2, Bernard Lunn. Countries can bitcoin be shut down weak currencies and weak democracies. Offshore Countries positioning as global hubs. Superpowers that may set the de facto standard. Countries that are confused and have competing agendas. We end with 3 stories about government and bitcoin that you can safely ignore.
Jurisdictional competition For a long time, entrepreneurs faced competition and regulators sent them the rule book. When you read stories about countries banning bitcoin, ask whether that country has: Offshore Countries positioning as global cryptocurrency hubs.
Two other countries with significant economies that face confusion and competing agendas related to bitcoin are: With a relatively strong currency, strong democracy and history of innovation, one would expect Korea to be positive towards bitcoin.
However other more geopolitical reasons may weigh on this decision as Korea is geographically positioned between China and Japan and has an erratic nuclear armed neighbour in the north. India is in transition and it is hard to see how this will play out. India has a historically weak currency and has only recently started becoming innovative as opposed to coding for hireyet has long had a vibrant democracy. If India makes the transition to a digital economy that is more driven by domestic consumption than exports, one could expect India to welcome bitcoin and for the currency to can bitcoin be shut down, but it could also go the other way.
Of course they will take the time to study this, it means nothing. There maybe some efficiency advantages for can bitcoin be shut down central bank from using DLT and some PR boost, but no real advantage for citizens.
Fining large companies is simply part of the government revenue model, no news here. You can reach out directly to discuss our advisory services by sending an email to julia at dailyfintech dot com Get fresh daily insights from an amazing team of Fintech thought leaders around the world.
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