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Anorak | Bureaucracy will kill Bitcoin

Bureaucracy will kill Bitcoin

by | 30th, May 2013

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BITCOIN’S this shiny new form of money that has hal the geeks and the libertarians shouting for joy. There’s no government involvement, it’s all entirely produced by code, there’s no nation attached to it and most importantly, there’s no name attached to an account. This makes it superb for anonymous shuffling of money around. And that, of course, is why it’s going to get killed by the bureaucracy:

With mounting pressure on online money exchanges from US regulators, payments processor OKPay has announced that it is suspending processing for all Bitcoin exchanges, including industry leader Mt. Gox.

The thing is, in order for a currency to “work”, in the sense of people being able to use it as a currency, it has to interact with the other currencies out there. At some point in the circle it’s got to be possible to move a bitcoin in or out of £ or € or $. And in reality, that means that it’s got to be possible to get from the $ to bitcoin and back again.

Which is where the bureaucracy comes in. The US authorities really don’t like things like bitcoin: as they most certainly didn’t like Wikileaks either. Whether there’s something illegal going on or not doesn’t really matter: there are so many rules and regulations that if the bureaucracy really wants to it can shut down the ability to interact with the $ payments system. And that’s what they did do with Wikileaks.

They just pointed out to all of the foreign banks that they all had operations in hte US. And it would be a shame if those US operations were to be subject to extensive audits all the time, wouldn’t it? At which point everyone stopped processing payments to Wikileaks.

I’m beginning to get the impression that that’s what is going to happen to bitcoin. Nothing so crude as a declaration that it’s illegal: just not so subtle pressure on the world’s financial system not to interact with it. And that really is something that will confine it to a party trick for geeks and libertarians, rather than a new global currency.

Photo: In this April 3, 2013 photo, Mike Caldwell, a 35-year-old software engineer, looks over bitcoin tokens at his shop in Sandy, Utah. Caldwell mints physical versions of bitcoins, cranking out homemade tokens with codes protected by tamper-proof holographic seals, a retro-futuristic kind of prepaid cash. 



Posted: 30th, May 2013 | In: Money Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink