Bitcoin Supporters Cannot Answer One Simple Question
That's a very simple question that I have been asking for months. My reason for asking is based on a simple premise:
If central banks or governments are ever threatened by Bitcoin, they will destroy it.
That reads like a third-grader response "If you don't know, I'm not going to tell you".
Under the transaction ban scenario I describe, the government will allow you to keep your bitcoin, it just will not let let banks or stores deal with Bitcoin transactions.
So, how do you get money in or out?
What good is peer-to-peer going to do you?
You can send your bitcoins to whomever you want. But try getting US dollars in or out, in size. This leads us to the Amazon gift card proposal.
Amazon Gift Cards
What happens if there was a $1,000 government enforced money-laundering limit on bitcoins and you wanted to buy of sell $250,000 in Bitcoin?
And by the way, if the US banned Bitcoin transactions, rest assured Amazon would not sell you a gift card for any amount of Bitcoin.
Despite the obvious flaws in Bitcoin beliefs, supposedly Bitcoin is government and censorship proof.
OK, let's assume Bitcoin is 100% impervious.
What about the value of it?
It's important to understand that the Bitcoin technology, bitcoin tokens, and the value of a Bitcoin are in fact three different things.
You can keep your Bitcoin, even barter it peer-to-peer assuming you can find someone willing to accept Bitcoin and also has what you are looking to buy.
War on Drugs
Rather than answer my question, the above person tried to change the subject.
Another person proposed flying to Bermuda or somewhere where he could deal in Bitcoin.
OK some people will do that, but how many?
And let's assume you can get $250,000 out. How exactly do you get that back into a bank, legally, in a way the US government will never find out about it?
Another person challenged me to name just one time there has ever been international enforcement that stuck.
I answered in about 1 second flat.
Of course the response came back that the EU would never get involved in this.
Central Banks to the Forefront
Please consider ECB’s Weidmann Urges Euro-Area Banks to Battle Facebook’s Libra
European Central Bank policy maker Jens Weidmann called on banks to come up with cheaper and faster systems for transferring money to combat alternatives such as Facebook Inc.’s Libra, and said there’s no pressing reason yet for the ECB to develop its own digital currency.
“I’m not in favor of always immediately calling on the state” to come up with solutions, Weidmann said in an interview with German newspaper Handelsblatt published Thursday. “In a market economy, it’s up to companies to develop products that meet customer demands.”
Weidmann, who heads Germany’s Bundesbank, has long called for caution over private-sector digital currencies and his comments echo concerns among officials from Europe to the U.S. over Libra, a planned digital token backed by multiple national currencies.
In case that was not obvious, I offer this proper translation: "I am immediately calling on the state to deal with the threat of cryptocurrencies".
ECB President Christine Lagarde and BOE Chime In
ECB President Christine Lagarde -- in common with Bank of England Governor Mark Carney -- has said central banks should consider whether it makes sense to launch their own digital coins, and she may make that question part of a wide-ranging strategic review planned to start this month.
Bitcoin is an Act of Faith
Not to worry, the Fed and the ECB would never, ever, in 100 years collude against a currency threat.
Besides you still have peer-to-peer bargaining which is fine if you want to buy a car and can find someone who is willing to sell you a car for Bitcoin.
Would it Even Take a Ban?
My questions were never realistically answered. But here's a new one: Would it even take a ban to destroy Bitcoin?
The correct answer is no.
- The threat of a ban could do it.
- $1,000 limits or even $10,000 limits on transactions could be enough to pack a huge price wallop .
- What about taxes?
- What is stopping the EU, US or China from immediately taxing all Bitcoin sales at 30%, 40%, 70%?
- Demonetization can scare the little guys off. How will the whales respond when their $1 billion is now worth $50 million?
Please think a bit more about point 5. Might not these whales dump when they see governments acting against Bitcoin?
Here's a better question: Are the whales dumping in advance right now, cashing out because they realize the supply of greater fools has already been exhausted?
Believe what you want, and you will, if you are a true believer because Bitcoin is Now an Act of Faith impervious to logical flaws.
Meanwhile, I just tossed a half-dozen more questions on the table.
Have a crack at them, but please come up with something better than a third-grader retort and Amazon Gift Cards as the means to avoid a central bank crackdown.
Mike "Mish" Shedlock