Bitcoin’s (Still) Not Dead

--Once more, with a hat tip to Twain, the news of bitcoin’s demise has been greatly exaggerated.

Last week, a couple of colleagues, Matt Insley and Ray Blanco, wrote of impending doom for the digital doubloon. (You can find their articles on the Daily Reckoning website here and here.)

We must, respectfully, disagree. And in the spirit of friendly debate, we’ve invited one of our favorite voices in the bitcoin space, Beautyon, to rap about why bitcoin’s still not dead. And why, indeed, it will live long and prosper.

Beautyon, if you’re not familiar, is founder of voucher-to-bitcoin company Azte.co, editor of Bitcoin Think and one of bitcoin’s most outspoken supporters.

It’s true, bitcoin is no stranger to controversy. Its first real stroke of popularity arrived, you’ll recall, when the dark web drug market, Silk Road, was shut down.

Although the feds seized millions of dollars in bitcoin, they didn’t call for its dissolution. Rather, they auctioned the bits off to the highest bidder, famed venture capitalist Tim Draper.

For this, the feds were all but complicit in the rise of bitcoin. (In the political world, after all, short term gain > long term consequences.) And if they had any inkling of shutting it down, the threats, regulations and red tape should’ve happened when bitcoin was but a baby and few understood what was under the hood.

But the sweeping threats, regulation and red tape never came. (And even if they had, bitcoin still wouldn’t have died, per se. It would’ve simply crawled underground a while longer.)

Today, though, the rubicon has been well crossed. The idea of bitcoin has already spread far and wide across the globe — long beyond the faltering reach of only Uncle Sammy. And nations, Japan being the latest, are wisely beginning to embrace the bits, not stamp them out.  (See: Japan officially recognizes bitcoin and digital currencies as money.)

Which is just one reason bitcoin isn’t merely limping along, struggling to survive. Despite its inherent controversies, in fact, it’s thriving. (Sitting at, according to Coinbase, over $1600, upon writing.)

Of course, when it comes to the fate of bitcoin, only time will reveal the truth. But, without further ado, to explain the other side — why bitcoin won’t die — here’s our conversation with Beautyon.

Read on.


Chris Campbell: To start, what do you say to the ongoing claims that Bitcoin is dead?

Beautyon: This is FUD (Fear Uncertainty and Doubt) or “scaremongering.” Japan has just formally legalized Bitcoin, and Hong Kong has explicitly said they will not regulate, with their “hands off” approach.

Other countries will follow, and they will absorb all the Bitcoin businesses, who will serve everyone globally.

Bitcoin is a sea change in the way people think about money and how they account for it. Before Bitcoin, the word “fiat” was used only by the readers of Lewrockwell.com now, everyone, even people who do not like Bitcoin call the dollar “fiat.” A powerful transformation is taking place, and it will not be stopped. The USA is not the entire world, and Bitcoin is global. If everywhere other than the USA adopts Bitcoin, then it will be one of the greatest software successes of all time. There is nothing to stop the rest of the world adopting Bitcoin; the GSM standard was everywhere except the USA and eventually they had to capitulate and adopt it.

Bitcoin will succeed. There is nothing any government can do to stop it, just like they can’t stop file sharing over BitTorrent and Internet Relay Chat. It isn’t a question of time either. No amount of time can put the Bitcoin genie back in the bottle. This change is forever. The only way out for anyone whose business is challenged by Bitcoin is for them to totally embrace and integrate it. The Japanese have understood this.

The courts in the USA (one in Brooklyn and the other in Miami) are also forcing people to wake up out of their collective hysteria. Two separate courts in different jurisdictions have now ruled that Bitcoin is not money. This means the “politicos” have no law to resort to to stop it. Texas has tabled a law to protect Bitcoin as a right. Slowly but surely, everyone is moving to the correct side of Bitcoin.

Chris: Could you dig deeper into how and why you believe bitcoin won’t be stopped? Many Americans believe the government can and will simply pass a federal law and… poof… make  bitcoin go away. Is this accurate?

Beautyon: In the age of the internet, it’s impossible to stop good ideas from spreading, and the world of 2017 is not like 1957, ‘67 or ‘77. Many parts of what used to be called the “Third World” now rival the USA in infrastructure. America doesn’t have the option of Luddism and ignorance; someone will eat its lunch.

Bitcoin cannot be stopped. This is not a belief, but a fact, based on the evidence of how it works and previous peer-to-peer software that has lasted for decades. You only need to look at two examples to come to this conclusion.

First, over Internet Relay Chat, software was traded for many years uninterrupted and undetected. Then, after several iterations of how to arrange a Peer to Peer network (Napster, Gnutella, BitTorrent) BitTorrent emerged as a way to share files that cannot be stopped. One third of all internet traffic is taken up with BitTorrent, and billions of files have been swapped without any consequence. There is no way to stop BitTorrent, and in some cases, its use is impossible to detect.

Bitcoin is the same in its effect, and is more safe in many ways. Rather than having to expose your IP address for a significant amount of time, a Bitcoin transaction takes a fraction of a second, and is indistinguishable from other internet traffic. It can be accessed in a number of different ways, through different clients, and these transactions cannot be stopped in advance of being made without shutting the entire internet off. Bitcoin, like file sharing, will not be stopped, and unlike file sharing, there is no company that can change its distribution model to adapt to the new reality.

Bitcoin is good money, and all the State can produce is bad money. The only meaningful way Bitcoin can be stopped is if the State creates its own Bitcoin network with identical features. We know that this is unlikely to happen, because the State is obsessed with controlling people and not helping them. Several governments are working on Bitcoin competitors and all of them will fail, because they are suboptimal, anti-market offerings that Bitcoin beats every time, because it is a pure free market tool.

Passing a law did not stop file sharing, and threatening massive fines and gaol time did not stop it. No law can stop people from engaging in the market; drug prohibition has been a dismal failure and is being repealed across the USA.

Any attempt to ban Bitcoin will similarly fail, only this time, it will be much worse, because everyone needs money, in numbers that greatly exceed the number of people who want to smoke marijuana. Money is one half of all transactions. Americans, once they wake up to Bitcoin, will flock to it. It will become “The money of the internet”. The American government can no more make Bitcoin go away than it can make marijuana smoking go away.

Chris: But what if Congress finds good reason to shut it down? After all, banks have a lot to lose with bitcoin… and deep pockets.

Beautyon: This is ridiculous. Congress finding a reason to “shut down Bitcoin” will not result in them finding a way to do it. Also, Congress has no power over anyone in any other country other than America. Internet Poker is illegal in the USA, but it is thriving globally.

And of course, people in America play internet poker illegally every day. With Bitcoin, they will be able to play internet poker and be paid in Bitcoin. Who is the loser in this? The American government, who does not collect taxes and fees from internet poker sites, draining what is probably a lot of money from the USA to the EU and other jurisdictions.

Banks have too much to lose? So did the telephone companies with Skype. So do the Taxi companies with Uber. Just because some established group has something to lose, it doesn’t necessarily follow that they will be able to stop an innovation.

Bitcoin is a very difficult topic to understand. And in the same way that some people refuse to use eBooks or even email, there will be people who refuse to use Bitcoin, just as when the telephone was commercialized, there were people who refused to have them in their houses.

Chris: What are some, if any, of your predictions about bitcoin and cryptocurrency in general? Also, what are the implications of mainstream adoption?

Beautyon: Bitcoin will become as big as email. It will be on every cellphone, phablet, tablet, laptop and desktop on Earth. It will be used for every conceivable purchase and for some presently inconceivable purposes. When mobile phones had to be carried in briefcases, no one imagined that literally everyone, including children, would have one.

The same will be true of Bitcoin.

The logic goes like this: “Everyone needs to use money, everyone is on the internet. Everyone needs to spend money on the internet, Bitcoin is the money of the internet, everyone needs Bitcoin.”

The implications of Bitcoin and mass adoption are harder to flesh out, but we can say for certain that Bitcoin means the final death of government fiat money. It means the death of banks as we know them today. It means the end of inflation (an increase in the supply of money). It means the end of Big Government. It means an era of unprecedented prosperity, as savings once again become the source of investment.

Then there are the impossible to predict consequences of not only the economic effects of Bitcoin, but the fact that a programmable money substitute is a global tool. One service that offers a glimpse into this is Purse, which opens up e-Commerce to everyone on earth, because Bitcoin is a guaranteed payment that can be made conditional through MultiSig transactions. The other programming functions coming to Bitcoin, like paying in the future, will by themselves cause new services to emerge that no one can imagine.

People who are computer and economic illiterates can’t understand even the most basic premises of Bitcoin; but they don’t have to. They don’t understand how GSM in their phones work, or the A5 algorithm that scrambles and unscrambles their voices and have no problem using a cellphone.

It will be the same with Bitcoin. Bitcoin will just “be” and that’s it. You will just use it, be paid with it and in it, and you will accept it, just as you accept email, cell phones, internet chat apps and all the other fantastically complicated things that are taken for granted.

When you pay with a credit card online, you never think about what the green lock means and how many steps and technologies are used to keep your information safe. You don’t think about how credit cards work, how UPS routes packages or anything else. You blithely go about your business buying what you want to buy.

Bitcoin will be another layer that everyone accepts, and they will accept it, because everyone else is using it, and in order to participate in society, you will need to use Bitcoin, just as it is when you receive a phone call; if you want to receive phone calls, you must accept that you need a phone and a number or an app.

You don’t question how it works under the hood, you just use it.

Chris: Thanks, Beautyon.

[Ed. note: As mentioned, Beautyon is founder of Azte.co, a burgeoning voucher-to-bitcoin service. If you’re a vendor interested in selling bitcoin, check them out here for more information.]

Until tomorrow,

Chris Campbell
Managing editor, Laissez Faire Today

P.S. Have something to say? Say it! Chris@lfb.org

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