When a government wants to ban Tor and encryption-based services, what they are really saying is that no one should have the right to privacy on the Internet. When a regulator says they want to ban Bitcoin, what they are really saying is that they want to ban financial privacy. When you try to control or over-regulate Bitcoin, you are really trying to limit economic and personal freedoms. The technology behind Bitcoin creates a tricky situation for most governments where they'll have to admit that their real goal is to not let anyone have a financial transaction that cannot be traced. At Tuesday's Bitcoin hearing in New York, Fred Wilson pointed out that, at its core, Bitcoin is about freedom more than anything else.
[embedvideo id="5k9hdeyDynw" website="youtube"]
Showing Their True Colors
One of the great things about Bitcoin is that it will force regulators and governments to show their true colors. It also shows how technology is making government regulation in certain aspects of life less practical with each passing day. Yes, it would theoretically be possible to shutdown Bitcoin completely. Having said that, you would have to have complete control over the Internet and admit that no one has the right to financial privacy. In fact, you would have to actually shutdown the Internet to make sure that no one is going to ever use Bitcoin for free commerce. This scenario does not seem likely. Not only would it bring a halt to the progress of humanity as a whole, but it would also assume that everyone is guilty before proven innocent. Once government regulators realize what it would take to prevent money laundering through Bitcoin, they will either have to implement domestic spying devices on every device connected to the Internet or just admit that the good outweighs the bad when it comes to cryptocurrency.
Don't Throw the Baby Out with the Bathwater
The argument against Bitcoin can be dressed up as preventions against money laundering related to terrorism, child pornography, and other horrific crimes, but we take the good with the bad in every aspect of life. Perhaps we could slow down the consumption of drugs with mandatory drug testing every morning on a national level. Maybe we could catch bad actors before they made a move if we collected every single form of human communication as it was sent through the web (If we aren't already doing that). The point is that we don't accept totalitarian laws because we would rather have more freedom in exchange for a small increase in crime. It's also important to remember that money laundering and anonymous communication are good and right when the local government is wrong. Yes, people do bad things with Bitcoin, and that is going to continue to happen. However, to completely ignore the other side of the equation where the entire world gets to enjoy instant and free transfers of value to anyone else in the world is the wrong way to look at the argument. I disagree with Ben Lawsky. If the choice is between crushing money laundering and allowing the level of extreme innovation found in the technology behind Bitcoin to thrive, then I'm going to choose Bitcoin every time.