Will Draconian Controls Drive Bitcoin Adoption?

Once upon a time, money was something people spent a lot of time getting but not a lot of time considering the nature of. Our money was valuable – it was something we all just assumed and the world did nothing to make us question that assumption. Our money just plain worked. The times, they are a-changing. While many still successfully bury their heads in the sand, awareness is continuously increasing that something is very wrong with our money. Many here in the U.S. will say “Oh no, nothing’s wrong with our money, it’s just that money from that other country, we’re fine.” This is typically followed by the nervous chuckle of thinly-veiled uncertainty. “I’m not an economist” they might follow up, “there’s smarter people than me taking care of these things.” Indeed there are, but an evil genius is still a genius and that attitude never kept the inmates from running the asylum.

I can speak quite clearly to this attitude – it wasn’t so long ago that I was saying exactly those things. My high school didn’t even offer economics and its importance was so downplayed to me by so many that when it became an option in college it never even occurred to me to take the class. Not that I never thought it was important, just not that it was important for me to know. I came to Bitcoin for the crypto and wound up self-educating on economics as a side effect. I was a programmer, why should I have cared? It’s a common attitude, though I suspect – and hope – it’s growing rarer by the day.

It’s impossible to ignore the idea that at least some money is bad. Most of us were around for the meltdown of the Zimbabwe dollar, though the modern crises in more familiar places tend to make for higher rated news. The average person almost certainly knows that there are bad things happening with the economies of countries everywhere and that at least some of those are because of bad monetary practices. Somehow, though, the illusion of our own security persists. Nothing’s wrong with our money, right?

But what’s the difference? That’s the uncomfortable question hiding just behind every word of the self-comforting lies, isn’t it? They’re all thinking it but no one is saying it… Something is wrong with the Iranian Rial, we’ll all say, but that’s different from the U.S. Dollar, right? Or the Euro? No. Not really. It’s no secret that everyone is basically doing the same thing where money is concerned: printing up government-endorsed paper that, to an extent, does a fine job facilitating trade but which has no inherent value and is arbitrarily controlled by some government or related body. Iran, Greece, Zimbabwe, America – we’re all using the same stuff.

What’s more, it seems there are more restrictions placed on our ability to use our money every day. For a product whose primary feature is supposed to be convenience and ease of use, money sure is getting complicated. Mexico, for example has recently banned large cash transactions, forcing transactions through easier-to-track digital banking systems and the government of Argentina is now tracking every single credit card transaction, suspicious or not. Iran’s government is playing games with exchange rates, some say to curb rising inflation and others say to hurt pro-western citizens’ chances of regime change. Whatever the purpose or methodology, it’s unarguable that controlling the money controls the nation – and more importantly it’s an established and known fact that most folks are likely aware of.

At this point in the article, I feel a bit like I’m preaching to the choir, though. We’ve all heard this before, we all know these things and the proselytizers in the crowd already have their Bitcoin-centric responses all queued up. “Bitcoin is backed by math, not a government” or “No one controls Bitcoin” echo in the back of my brain… But before you can preach the Bitcoin gospel, people have to be listening. You can have all the answers, but you’ll probably be ignored unless the other guy actually asked the question first. It seems, given everything that’s happening in the world that these questions should be on the tip of every tongue, but that’s honestly not been my personal experience and I can’t figure out why.

Regularly I find myself explaining Bitcoin to someone and they still ask “Why? What’s wrong with the money we’ve got?” It’s a question I can answer, certainly, but how can they possibly still be asking it? I thought, perhaps, that the collapsing economies of other nations would be enough to make the average person start to wonder about their money, and I’ll admit I was dead wrong on that count, but still have hope.

My gut feeling is that these collapses were seen by others as “forces of nature” – the sort of bad things that just happen every now and then. Most folks are like me a few years ago: They lack, through no fault of their own, adequate economic education to properly understand things like hyperinflation, so I can’t fault them for seeing it the same way they’d see a volcano eruption or a massive earthquake. What gives me hope is that so many of our current crises aren’t likely to be viewed in that same light. When Mexico clamps down on cash, Argentina starts snooping through your receipts and Iran intentionally manipulates exchange rates it’s hard to see it as anything but what it is: Governments manipulating something they have power over for their own ends.

Perhaps, terrible though these things may be, these kinds of news stories are exactly the sort of thing Bitcoin needs: A whole new set of opportunities just waiting for talking points. I could also be wrong – the increasingly restrictive attitude of government might bode poorly for Bitcoin’s future anywhere but black/gray markets which I think we all agree would be a terrible shame. But hey, don’t let me have the last word – let my minor addiction to reader pools get a word in. What do you think?

Are draconian controls and government interference a good thing for Bitcoin?

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  1. "the increasingly restrictive attitude of government might bode poorly for Bitcoin's future anywhere but black/gray markets which I think we all agree would be a terrible shame."

    I don't agree. Otherwise, excellent post.

  2. Nice article, Perry. At a different level, the exclusivity of the global SWIFT network is also used by stronger nations to keep the rogue States in line.

    I have really started to dislike the terms "black" market and "gray" market, because they are pejorative terms. It would be more appropriate to call it the "original" market or "primary" market.

  3. Very few Americans have any grasp of how bad the world economic situation is. I figure that some people know about Greece but almost no one realizes that the whole EU is in dire straits. In terms of the US, forget about the debt or the deficit numbers. Try this. Ask people how many million in a trillion. I bet less than 10% of people give the correct answer.

    I believe that BTC adoption is therefore hindered in the US by a lack of appreciation of a need for it. People still have faith in the USD because of its history. Will this confidence persist as the Fed continues to print money? How long will the faith in the USD last? Will it be a slow loss of confidence over the course of years or decades? Or will it end over the course of a weekend?

    I wonder if bitcoin adoption per capita is higher in countries that have lived through severe inflation?

    Also, the technical hurdles of bitcoin adoption are still large. What the heck is a hash, a cryptocurrency, a key, mining, a block, a blockchain? The majority of people aren't going to embrace bitcoin if we have to explain the above concepts and they don't really care anyways. Early adopters will though. It is up to the technical saavy to get this currency system ready for the masses so that they don't have to understand the above terms. It's got to be idiot proofed and "Jobs-ified".

    Bitcoin needs to be ready when the masses need it. People will flock to Bitcoin not vice versa.

  4. How do you get people to have confidence in Bitcoin? By using the pizza effect.

    People's biggest fear is whether Bitcoin can actually buy tangible 'stuff'. However, if I were to buy my colleagues a pizza for lunch using Bitcoin at a fraction of the usual price ….they would see the mouth-watering, tangible benefit right there in front of their eyes.

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