Love him or hate him (I frequently do both), philosopher Stefan Molyneux makes an interesting point when he says that while many stand to see incredible lifestyle gains from Bitcoin, others stand to lose. And it’s those who stand to lose who will try to foil Bitcoin at every turn.
But, Molyneux says, many in the Bitcoin community are mistakenly seeing the blatant attempts to hamper Bitcoin’s growth as positive signs. Who exactly stands to lose by mainstream adoption of cryptocurrency?
Well, if they choose not to adapt to new trustless systems, employees in trust-based industries like accounting, lawyering, brokering, and fund management stand to lose their jobs. This isn’t necessarily a bad thing—how many of us would trade in our cars for a horse’n’buggy in order to protect the old wagon industry from having to adapt to the automobile? Not too many takers, I would venture.
“We should continue to do what we’re doing, to spread horizontally through the economy,” says Molyneux. “But recognize that at some point, there is going to be a conflict of Biblical proportions between decentralized, encrypted currency mechanisms. . . and the entrenched financial interests.”
Bitcoin stands to present a massive shift in resource allocation, especially in North America, where the trust-based sector makes up a whopping one-fifth of the economy.
Molyneux theorizes that the recent demands that have come from government organizations like FinCEN are aimed more at protecting these trust-based industries than “protecting consumers.” And why would they do that?
He says it all comes down to favors and friends:
“The financial sector is the biggest single contributor to politicians, at least in the United States.”
So if trust-based industries give more cash to politicians than anyone else, how would that influence these so-called regulations? Molyneux continues:
“They’re not going to try to take out [Bitcoin’s] revving engine with an airstrike. They’re just going to try to throw little bits of sand in it, little bits of sand, until most people find it too difficult and cumbersome to use. That is the great danger.”
Could Bitcoin—the instant and frictionless network—become too cumbersome to use? Consider the fact that FinCEN insists that businesses dealing in Bitcoin are to be called “money transmitters” and must acquire an additional “licenses” to continue operations.
These licenses cost scads of money, require expensive bond policies and necessitate the employment of additional compliance staff members, not to mention lengthy wait periods (time is money). This is all highly cumbersome. Gone would be the days of approaching a small-time merchant to say, “You’re interested in accepting Bitcoin? I can help you get set up for it in about ten seconds!”
Furthermore, if in the name of “KYC” and “AML” compliance businesses adopt identity-tracking software like the one proposed by ID3, customers would be further inconvenienced by the need to create an online “biometric and behavioral” identity before spending their Bitcoin. This too is cumbersome and makes fiat look more appealing than ever.
“If they make it more and more difficult for honest, law-abiding citizens to use Bitcoin, then it will displace itself into the ‘black market,’ and then they’ll say, ‘See, we told you it was going to be used for crime! Let’s get back to fiat currency.’”
While Gavin Andresen and many others see regulation as some sort of sign of mainstream acceptance, Molyneux counters that it’s actually these cumbersome regulations which will prevent the mainstream from using Bitcoin. It will simply become too expensive and time-consuming.
Andreas Antonopoulos has agreed with Molyneux’s argument, repeatedly citing the Red Flag Act in England at the turn of the 20th century. This legislation put cumbersome regulations on the use of automobiles in the country, and as a result, the automobile industry died in England and moved elsewhere—America in particular.
If history shows us anything, it’s that the path of least resistance is what most people will choose in their everyday dealings. Right now, Bitcoin remains the financial path of least resistance. But Molyneux argues that if U.S. regulators prevail, it won’t stay that way.
Did you enjoy this article? You may also be interested in reading these ones:
- JP Morgan, Bankers: Bitcoin Can Only Compete if it ‘Conforms to Regulations’
- Banks Want Bitcoin Regulated, But See Same Benefits We Do
- U.S. Regulators are Slowing Pulling Bitcoin into the Existent Regulatory Framework