“Permit me to issue and control the money of a nation, and I care not who makes its laws!” -Mayer Amschel Rothschild
People just getting into cryptocurrency may wonder why governments express such concern about it.
On the surface, after all, Bitcoin and other cryptocurrencies seem quite innocent.
What’s the harm in a little computer code that people agree is valuable?
Well, reader, the answer’s simple enough. What you’ve just described is money. The root of all good and evil. The thing that makes the world go around.
Crypto Threatens Government Hegemony
To maintain its control of society, a government must have a great deal of control over the money supply.
Cryptocurrency by itself doesn’t present an outright threat to the hegemony of government. What matters, after all, is what you can pay your taxes in.
Private companies issue a form of money all the time: gift cards. Governments are far less threatened by these, because no one would ever expect them to cover a tax bill with gift cards.
Nonetheless, if gift cards started calling themselves “currency,” the government would pay closer attention to them.
It is a reasonable belief that one of the dominions of government is the issuance of money. In the United States, it’s done by a semi-private conglomeration of the Treasury and the Federal Reserve.
To understand it from a Bitcoin perspective requires some analogies.
While the Treasury does the equivalent of mining, the Federal Reserve acts as a domineering exchange that basically controls the game.
Escape To Bitcoin Island
Thus, cryptocurrency, when it works well, creates a parallel universe.
In practice, the new universe isn’t much difference than the vibrant, apparently eternal world of fiat cash, where government has even less insight than it does with crypto.
But, thinks the government mandarin: what if everyone stopped using our official system and switched to cryptocurrency instead?
From there, a flurry of questions go through a ruler’s mind. How will you tax it? How do you seize it? Can it be stopped?
Given a choice, many people will go with the most comfortable option. For now, that option very much remains our entrenched fiat systems. This is due in no small part to efforts on the parts of banks and regulators to keep crypto incredibly hard.
Regulations aren’t all there is to it, though. By all accounts, blockchain technology is still in the “early adopter” phase.
Right now, it’s safer and more convenient for the average civilian to use a regular banking service, and that probably won’t change in the near-term.
There’s one last aspect that a crypto newbie might need to consider around this question.
Let’s throw this at you: the reason government dislikes Bitcoin and other cryptocurrencies is that government is beholden to banks.
Banks are threatened by cryptocurrency. They will always will be vulnerable to the disruption it presents.
Beyond finance, blockchain represents a radical world of transparency that most of our Western institutions are unprepared for, especially in public life. Within our lifetime, we may see an answer to the question: if the people knew everything, what would they do?