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Peter Thiel, worth of US$2.7 billion and involved in Trump’s transition team, speaks of the threat bitcoin has on fiat money and the financial freedom it grants to its users.
Over the past few years, Peter Thiel, a prominent venture capitalist with a net worth of $2.7 bln, spoke of the threat Bitcoin poses to fiat money and the financial freedom it grants to its users.
Thiel, who appeared on the Economist’s Keynote interview, stated:
"It becomes a threat to fiat money at a point where Bitcoin is encrypted in such a robust way that the tax authorities can't break the encryption, can't tell how much money you have, and what transactions you are doing."
Currently, Thiel’s stance on Bitcoin is notable considering his involvement in President-elect Donald Trump’s transition team, establishing himself as a crucial member. He emphasizes that the decentralized nature of Bitcoin allows users and citizens of the U.S. to benefit from financial freedom and escape the monopoly of the government.
More importantly, he notes that tax authorities will no longer be able to track the earnings and income of entrepreneurs, workers and other individuals that are forced to deal with extreme amounts of income taxes among others.
Thiel believes that Bitcoin is anonymous and that authorities can’t tell how much money users have. Conceptually however, this statement is false. With KYC regulations in place for exchanges and payment processors, using the public Blockchain, it is possible to label an address with an identity and track payments from it.
Unless a user purchases Bitcoin via over-the-counter methods, regulators and authorities can utilize transaction untangling systems to unravel the face behind most transactions.
There are several ways Bitcoin purchases can remain truly anonymous, and one of the methods is utilizing a non-custodial wallet to purchase Bitcoin directly from miners. This way, exchanges and payment processors aren’t involved and the government won’t be able to track down the owner of the wallet.
The real threat of Bitcoin to fiat isn’t tax dodge. It is its ability to grant each user the capacity to become their own banks, rendering the purposes of banks unnecessary. Users will not need third party institutions to protect their funds. In this time of economic instability, rising inflation rates and the implementation of negative interest rates, users shouldn’t trust banks and financial establishments to store money.
While Thiel’s statement focuses on the anonymity of Bitcoin, he also states that the only possible way a financial network could serve as an alternative to the U.S. dollar is if it is decentralized. PayPal was designed to act like Bitcoin, to allow users to become their own banks. However, due to the financial regulations and KYC policies in place, PayPal transformed into a fiat money-based, heavily regulated platform.
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