Dec 172013
 

China’s recent aggressions towards bitcoin are foreshadowing how other governments will likely react to the cryptocurrency’s popularity. While it took some by surprise, I think what we are seeing is a clear picture of what happens when the state realizes the threat posed by bitcoin to its own fiat currency.

China has in the past, made moves to bolster the yuan as a formidable opponent to the petrodollar. By suggesting pegging the yuan to gold and urging oil rich countries to trade directly in the yuan—bypassing exchanging to dollars—China has been strategizing a takeover for some time. I’ve hypothesized before that perhaps they might be friendly to bitcoin as a way to unseat the dollar from its world reserve currency status, but that was wishful thinking.

China originally pegged the yuan to the dollar for stability.

China originally pegged the yuan to the dollar for stability.

One of the world’s most totalitarian governments is no fan of competition, and if bitcoin could unseat the blood dollar, there wouldn’t be room for another fiat currency like the yuan, either. Now, since the economy is centrally controlled, government officials may not be so concerned with losing bitcoin as a way to compete against the US. Politically speaking, it might even be advantageous for the US government to embrace bitcoin as a way of increasing economic clout, but I suspect any warm feelings will be short lived as we saw with China. While the countries appear to be on friendly terms now, there’s always scheming behind the scenes to stay on top.

While I believe it is a mistake economically speaking for China’s government to prevent money services from using bitcoin, I have to recognize their longevity as a country and can’t help but think there are some cunning moves ahead. As much as I oppose totalitarian governments in all sizes and flavors, I will give a tip of the hat to China’s historically calculating strategies; they’ve been around a lot longer than the good ole US of A and this isn’t their first rodeo.

Richard Branson's down with bitcoin, too.

Richard Branson’s down with bitcoin, too.

I’m not keen on predictions, but I suspect you’ll see the US follow suit come tax season. Maybe you won’t see the US banning money services from allowing transactions in bitcoin, but the goons always have plans to crack down on awesome ideas. Uncle Sam always wants a slice of the pie, and bitcoin falls under the same regulations as cash. One way to scare off investors in bitcoin would be to cage a few tax protestors, and this would be easier than outright banning bitcoin being used as a currency. Well, considering one could prevent people from accessing the blockchain in the first place—we may soon see bitcoins in space as a preventative measure in case the grid gets shut down. To the moon indeed!

So, as we end an eventful year of firsts with bitcoin in 2013, the upcoming year will see some new firsts and I suspect things will get very heated. Hold on to your wallets because 2014 is going to get intense. Bitcoin faces a rocky regulatory road, but we’ll soon find out if bitcoin really is the honey badger of money. We’ll see some setbacks, but like the venerable honey badger, bitcoin will bounce back and continue devouring the current currency paradigms.

Original content by Meghan, copyleft, tips welcome

Meghan

- Poet, fire dancer, activist. Office manager at Roberts & Roberts Brokerage and a part time agorist, Meghan is committed to building bridges with a variety of activists and approaches to creating a freer world. When she’s not busy expressing her own freedom through spoken word poetry or fire dance, she educates others about the effectiveness of Agorism/usage of cryptocurrencies as a way to redistribute power back into the hands of the people.

  One Response to “Bitcoin and China—The Regulators are Coming, The Regulators are Coming!”

  1. I think that there’s an interesting phenomenon, wherein the governments of countries on the one hand want to subvert the population for its own benefit, but on the other hand want the population to thrive in order to extract taxes, and be more powerful than competing countries.

    China would probably love to be North Korea and ban the Internet outright in order to control their citizens, but it would put them so far behind the U.S. economically that it would be a losing proposition. Perhaps Bitcoin will be in a similar position. The U.S. loses some power over its citizens by allowing Bitcoin, but the economic boon (if I were to put aside my economic objection to Bitcoin) may make it tempting for them in overtaking China. Perhaps it’ll take a crisis for them to flash-deregulate. Then, in response, China may follow.