Renowned Austrian economist and anarcho-capitalist, Jeffrey Tucker, recently spoke with news.Bitcoin.com regarding his views on a number of facets to the cryptocurrency ecosystem, including government regulation, monetary fundamentals, and language.
Mainstream Investors Enter The Crypto Landscape
With bitcoin pushing $100 billion in market capitalization, the flagship crypto is attracting mainstream investors around the world – people who were initially skeptical of digital, non-fiat cash. So what do traditionalists who are familiar with “hard money” bring to a growing crypto community?
“They can bring a knowledge of monetary fundamentals,” says Jeffrey Tucker, an economist and founder of Foundation of Economic Education (FEE). “One of the things you learned about the bitcoin community between 2008 to 2014 is that it mostly consisted of computer scientists and code geeks who didn’t know a lot about monetary theory. The ‘hard money’ community brings knowledge of economics and money.”
Gold and silver have been used as hard cash since the dawn of civilization. Tucker believes that the language of crypto is rooted in age-old money practices. “Many of the metaphors we used in the crypto world come from the history of gold standard. This is why we talk about mining, proof of work, cold storage and so on.” Tucker adds, “Understanding the gold standard can give you insight into why bitcoin works the way it does.”
But as mainstream investors normalize the use of bitcoin, author Wendy McElroy cautions in “The Satoshi Revolution” that history is full of examples where private mints were ungraciously pushed aside in favor of monopolistic state presses. “Government is threatened and wants a monopoly [of cash issuance]. Cryptocurrencies … can expect the same treatment from governments around the world: a mixture of banning, obstacles, absorption and punishment,” she writes.
Can Governments Restrict Bitcoin?
As bitcoin clears the $6,000 price hurdle, there is a key question facing crypto enthusiasts. Will governments succeed in limiting or controlling bitcoin? Economist Jeffrey Tucker is skeptical.
“Bitcoin is the application of free-market principles to money in the digital age. It is the alternative to centralized government control,” says Tucker. “It is the replacement of an old technology with a technology that is connected to the lives of real people…. Governments will try to hold it back, but this is a hopeless battle in the long run.”
Russia and Ukraine appear headed towards regulating bitcoin and other cryptocurrencies, while Singapore’s central bank recently announced it won’t pass any restrictions. For now.
Tucker cites blockchain technology and distributed ledgers as making the world’s most popular cryptocurrency resistant to central bank or state intervention. “It’s true that in the past, governments have usually outlawed private money. But there is a difference this time,” says Tucker. “Bitcoin lives on a distributed ledger. It is pure math and its platform is global and immutable. Governments can no more outlaw bitcoin than they can outlaw algebra.”
The Power Of Global Peer-To-Peer Systems
Modern peer-to-peer networks have existed for nearly two decades. Think Limewire, Bittorrent and other software that facilitated the free exchange of mp3s and video files. Most were shut down or discredited from costly legal battles, until eventually the tech landscape changed and users went on YouTube to download their music or videos.
Tucker, like many others, thinks bitcoin is a different, more resistant beast. And that governments may be trying to handcuff an elusive whirling dervish.
“Bitcoin is anti-fragile. It’s a technology that grows strong when under attack,” says Tucker. “It has experienced blows, but it only grows stronger and better. This is why the critics are constantly feeling humiliated, and somehow never admit it.”
He adds, “Government can slow down adoption, especially by controlling and regulating the exchange. Another method is through taxation, by subjecting crypto profits to onerous reporting standards and taxation. The blockchain itself cannot be controlled but the nationalized institutions surrounding blockchain can.”
As governments around the world contemplate how to deal with (and tax) bitcoin, the user-base of digital cash grows each day. Bureaucrats aren’t necessarily known for smart policies or effective enforcement so it remains to be seen if they can wrap their heads around one of the most important innovations in recent decades. In the past, governments have implemented money controls that have large-scale unintended consequences. Consequences, such as inflation and market panic, that have led to the realization of Satoshi Nakamoto’s vision in the first place.
What is your response to Jeffrey Tucker’s views on regulation and the cryptocurrency ecosystem? Share your thoughts in the comments section below!
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Don’t forget to visit Bitcoin.com to read “The Satoshi Revolution” by Wendy McElroy. All sections are posted on the book’s dedicated page as soon as they’re released.