One thing many people fail to realize is that government’s like to control what is legal currency as it gives them unprecedented power. This tradition has gone back to the days of kings issuing coins with their images on them and disallowing commerce in their realm unless it was done with the use of coinage bearing their faces. It’s not at all surprising that the United States government eliminated the gold standard, a standard most often chosen in a free market, and created the Federal Reserve to issue all legal tender. Not only did the United States government switch to a fiat currency which they basically control they also made the possession of gold coins illegal and then confiscate coins in private hands.
Every time a new currency starts to make any headway the government steps in and shuts it down. These shut downs are always preceded by justifications for eliminating the potential alternative currency and now the government has unveiled their excuse for attacking Bitcoin, which not surprisingly involves the drug war:
Two U.S. senators have written an open letter to the United States attorney general, asking federal authorities to crack down on “Silk Road,” the Internet black market drug trade, and the digital currency that funds it, Bitcoins.
After reading the report on Silk Road, written by Gawker’s Adrian Chen, Democratic Senators Charles Schumer of New York and Joe Manchin of West Virginia wrote a letter to U.S. Attorney General Eric Holder, Reuters reports. The letter states:
“The only method of payment for these illegal purchases is an untraceable peer-to-peer currency known as Bitcoins. After purchasing Bitcoins through an exchange, a user can create an account on Silk Road and start purchasing illegal drugs from individuals around the world and have them delivered to their homes within days. We urge you to take immediate action and shut down the Silk Road network.”
The truth behind this attack though is the bankers aren’t happy with the idea of an alternative currency that they can’t control. Unlike previous currencies though Bitcoins aren’t controlled in any manner by a central system making the elimination of the currency difficult. That being said there is nothing stopping the government from making possession of Bitcoins illegal and then establishing a method of searching for Bitcoin related Internet traffic. It will be interesting to see how this continues to play out, especially if Bitcoins become more popular in commerce.
the bankers aren’t happy with the idea of an alternative currency that they can’t control.
Jct: Way too late. Africa is trading with cell-phone minutes, Arabia with cell-phone cards, Ithaca Hours, LETS trade time. See my facebook info page for my UNILETS timebank account IOUs.
And that’s the thing, even with government interference the market will choose a commodity which will be traded and thus become money. Trading cell phone minutes, calling cards, salt, etc. is no different than the gold standard except the commodity being used as money changes. In the United States the government has actively used their monopoly on the initiation of force to ensure their preferred currency remains the only currency. When they see a new potential currency emerging they quickly swoop in and try to snuff it out.
This is almost impossible as people will barter but the government can punish those who refuse to play by their monetary game which is the scary part.