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Daily Reckoning
Buenos Aires, Argentina – 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:
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1 comment:
Bitcoins are a danger to their power. One cannot tax bitcoins nor can they control the quantity. I have not used them, but if offshore gambling sites take bitcoins all of the legislation they pass to limit where and how US citizens can spend their fiat dollars will go up in smoke.
What about expatriating Fiat dollars? I could buy bitcoins with Fiat US money, then buy foreign dollars with those bitcoins and avoid all the regulations they have placed to force me into keeping my money here so they can tax it and my estate when I'm gone.
This is a real challenge to their power. Look for them to "hack" the bitcoin system very soon to cause users to lose confidence in its value. They are already doing the same thing with the Fiat dollar.
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