Friday, October 26, 2012

The Old Radical: How Bitcoin Is Being Destroyed

Posted by Julia Dixon
DGC Magazine
Wednesday, October 24, 2012

This piece was recently sent to me by “an old radical.” The message is perhaps a bit harsh, but I have to admit, all I can do is grimace and nod in agreement to this thesis… “Bitcoin and state banking systems are born enemies: only one can survive. If you are imagining that they can peacefully coexist, you are fooling yourself.

I was a radical before most of you Bitcoin users were born. That doesn’t make me any better than you (hopefully I did a few things to make you better than myself), but it does give me a better perspective; time just works that way.

I’ve been watching the recent developments in the Bitcoin markets, and having seen this drama before (too many times), I thought I’d pass along a lesson. This will strike its target in some of you, but others of you are also likely to reject it, because it doesn’t match what you want to be true.

Here’s the lesson: Trying to go ‘legit’ will destroy the Bitcoin market.

For those of you who haven’t turned away, I’ll explain:

There’s nothing really wrong with Bitcoin itself. The developers are doing a nice job of addressing its problems and a heartening number of people have jumped up to create new tools and new services. No problem here.

The problem is that too many people in the Bitcoin market are thinking the old way.

Understand this: Bitcoin is a new thing – it is  not compatible with the old financial system.

Bitcoin and state banking systems are born enemies: only one can survive. If you are imagining that they can peacefully coexist, you are fooling yourself.

Bitcoin exposes the fraud that is state banking. If you think that politicians and bankers will calmly allow it to take over a significant percentage of world financial flows, you’re in denial. States will come after Bitcoin, and hard. They have no choice. Their money can only exist if there are no competitors.

Alan Greenspan may have done a lot of bad things, but he is not stupid. And before his adventures at the Fed, he wrote this:

"(Under a fiat system), there is no way to protect savings from confiscation through inflation… If there were, the government would have to make its holding illegal, as was done in the case of gold."

What gold was then, Bitcoin is now… times five.

So, let me try this again: Going legit gives the state a handle to grab you with. ‘Legit’ means registered and regulated, doesn’t it? You have to tell them your name, where you live, and where you put your money, right? It means that they can control you whenever they want to.

There are two big reasons why Bitcoin people are tempted to go ‘legit’:
  1. They want to get mega-rich fast, like Mark Zuckerberg.
  2. They have been trained to be obedient and can’t unlearn it. They are compelled to believe that the government is basically good. It must just be one bad politician or one bad law.
#2 is what destroyed e-gold, and it looks like #1 is what killed GLBSE.

Because of GLBSE, Bitcoin is now being regarded as a currency and states will start to regulate it as one. That means that they’ll attack the public exchangers and force everyone possible to comply with their rules.

So… it’s time to man-up, or to crumble.

(Interestingly, there is often a larger percentage of women that “man-up” than men.)

Will you have the guts to do the right thing when the pressure is on? If yes, I applaud and honor you. If not, here are a few cheap excuses to use (after all, who wants to admit conditioning or cowardice):
  • Without the rule of law, everything would fall apart.
  • Without regulation, criminals would destroy everything.
  • Yes, regulation is coercive, but along with it comes a certain amount of public benefit!
  • I got ripped off, and someone has to fix it!
  • If I can’t sue someone, they can get away with ripping me off!
  • We can’t get people to use Bitcoin unless it’s authorized.
  • We need approval or we will forever remain a tiny market.
A significant number of Bitcoin people will say these things (and others), but the real truth will be that they are scared, or are still hoping to get mega-rich, or just can’t rip the “government is our friend” meme out of their heads. But mostly it will be fear.

We all feel fear of course, but some of us are determined enough to do the right thing, even when we’re afraid.

So, here’s a final tip: If you run into someone who can feel the fear and still do the right thing, don’t let go of them.

Reprinted with permission. 


  1. I totally agree with her sentiments. I lost faith in Bitcoin about a year ago when the strongest voices in Bitcoin said they wanted to seek regulatory approval from the various financial overlords of different countries.

    That's game over.

    It's like asking the mafia if they would mind if you start a legitimate trash collection business to compete against theirs that relies on graft, corruption, theft, and shakedowns.

    "Why yes, come right in!"

  2. Within a year the Bitcoin Foundation will announce a partnership to increase Bitcoin's legitimacy by optionally "certifying" coins with a sovereign authority of your choice. It will be added to the "official" client distributed from

    Within two years the vast majority of the network will be running such clients. Any uncertified coins sent or received will be marked in bright red in the transaction log.

    Within three years the exchange rate for uncertified coins will plunge to 5% of that for certified coins. Merchants will refuse to accept them since it's such a hassle to deal with "second class" coins that can't be sold on MtGox or used to buy metals from CoinaBul.

  3. In your list of reasons, you forgot:

    * I cannot stand the idea that I might be agreeing with Atlas for once

  4. "...but it does give me a better perspective; time just works that way."
    Warning bells should start going off here.

    There's only one gold, only one silver... but infinite cryptocurrencies. We can code faster than you can regulate. The slippery slope goes down in our direction, not theirs.

  5. Perhaps this is the end for Bitcoin. Yet it appears that another could form using the same algorithm. Hence, the pathway to a new human phenomenon has been set. It's a beautiful time to be alive!

  6. Have to agree with the comments:

    1) certifying will kill Bitcoin
    2) "Bitcoin2" could learn from this and stay "rogue".


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