Lee on Obama’s non-Defiance of Bitcoin

Bitcoin What is it about the splashy new Internet currency Bitcoin that has captivated the financial world’s attention? And just what exactly is it about Bitcoin’s libertarian, get-around-the-government origin that appears to have put Mr. Obama’s uber-financial regulators on the defensive?

Yes, Bitcoin is politically popular. But then again so are gun rights — and the forces of big government don’t seem to care. Like the popular new bumper strip says, “The Only Government Agency That Pays Attention To Us is the NSA.” There is something more going on here. Defenders of the dollar’s monopoly are far more dedicated than that. Has Mr. Obama changed somehow? After all, his federal regulators signaled in November their willingness to accept Bitcoin as a
legitimate alternative currency to the dollar.

Has Mr. Obama Really Caved
to Bitcoin as an Alternative Currency?

Edward Lowery, a special agent for the Secret Service, went so far as to tell The Wall Street Journal about Bitcoin that “there are plenty of digital opportunities to operate within existing laws and regulations.” It just doesn’t add up.

Why the relatively muted federal response to the Bitcoin craze? Senate Democrats recently held hearings on this very subject. Some brought up the potential for Bitcoin to become a favored tool of criminals and pornographers, but for the most part their response was fairly tame. After all, Bitcoin was founded with a single and fixed number of units. Right now there are no opportunities for making more of them. You buy Bitcoins for your online “wallet” from the fixed number of founding units, and then use them to make online purchases. Bitcoin transactions are intended to function outside the direct control of government.

Libertarians and Treasury Regulators
Agree on Bitcoins?

Many libertarians love the idea of using Bitcoins as money, because there is a fixed supply. The more important issue is why are those who favor all powerful government and endless money printing not more upset about Bitcoins?

Let me point to three explanations everyone should consider:

1. Getting a Bitcoin wallet is just a matter of buying them as you would any other good or service, but there is no privacy in choosing Bitcoin specifically. If Bitcoin were to become universal, the left would have a major breakthrough: The end of cash transactions as we know them, a fully digital currency which can be tracked and analyzed to the Nth degree. A currency like the dollar, that is based on faith and credibility but no hard backing.

2. Perhaps Mr. Obama and the Treasury have calculated that in addition to ending cash hoarding, the rise of a universal digital currency can undermine far more tangible and private forms of wealth preservation, such as precious metals.

3. Also, Mr. Obama and the left are patient. Once Bitcoin or some other alternative is in wide use, regulators can eventually force the creation of more Bitcoins to expand the money supply. Just food for thought. Alternative currencies will continue to gain popularity, and Mr. Obama and the Treasury Department know it. Perhaps they are merely bending to the public will, or perhaps they figure that Bitcoin is their least worst option.

In the meantime, lots of speculators are making big bucks trading Bitcoins. Many respected observers also believe that Bitcoins are an unstoppable freedom trend that is too late for the federal establishment to stop. They could be right too.

What do you think?


Lee Bellinger

Lee Bellinger, Publisher Independent Living