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.
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.
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