Sunday, January 29, 2023

Cryptocurrency: Subverting Banks and Governments… Or You?

Cryptocurrency: Subverting Banks and Governments… Or You?

In a time of such geopolitical uncertainty, it was only a matter of time before the jostling and brinkmanship moved into the cryptocurrency arena. The BRICS countries want to subvert the U.S. dollar’s as the world’s reserve currency. But what happens when governments and banks master the blockchain art? Will ordinary people still be allowed to benefit from permissionless digital money?

Also read: ‘We Don’t Beg Banks to Work With Us, We Replace Them’

Only a few days ago, Bitsonline wrote about the possibility of the IMF launching its own “permissioned” cryptocurrency, and noted that many countries were, perhaps coincidentally, releasing statements regarding the legality of initial coin offerings.

The loose theory was that the global elite and governments, spearheaded by the IMF, may try to shut down the burgeoning crypto economy, in order to implement their own version of digital currency — while at the same time banning all other forms of payment.

This sentiment was echoed by controversial Australian Liberal Democrats senator David Leyonhjelm, who commented on what he thinks will happen if governments push into the digital currency arena.

“The disturbing thing [is] … I can almost guarantee they will say, ‘Now we’ve got a digital currency, all other digital currencies are illegal.'”

BRICS Nations Want a World Reserve Cryptocurrency

While a number of countries have begun releasing statements concerning ICOs, the country most at odds with the U.S. and IMF, Russia, has been an exception. Their stance seems to be more measured regarding the legality of cryptocurrency.

BRICS Moscow skyline
Moscow skyline

Now comes news from the head of the Russian Direct Investment Fund, Kirill Dmitriev, that the global BRICS alliance (Brazil, Russia, India, China, South Africa) may look to use a “sanction buster” cryptocurrency to rout around the dominance of the US dollar.

“For particular payments it might be quite relevant and serve as a good alternative to the dollar or any other currency,” he said.

BRICS countries, especially Russia and China, have increasingly been implementing payment protocols that bypass the U.S. dollar global reserve currency. This is to allow a free flow of trade between member nations — for example, trade in oil can now be transacted in yuan and settled in gold — and importantly for Russia, enable them to trade even if the U.S. continues to impose further sanctions on their economy as it has since the Ukrainian conflict of 2014.

The surmised BRICS cryptocurrency could perhaps be backed by a basket of member countries national currencies, similar to the IMF’s SDR (Special Drawing Rights).

Currency ‘Cold War’ Possible

As mentioned, Russia has been forging ahead with its cryptocurrency plans, perhaps with an eye on a future where economic and financial independence from the global USD hegemony takes on more significance.

Communications Minister Nikolay Nikiforov recently noted the designs of cryptocurrencies like Bitcoin and Ethereum are developed using “foreign cryptography” and that “Russia has its own cryptography school. I think that we are absolutely capable of creating a cryptographic unit, a tool, based on the blockchain technology, and work out concrete regulations to set the framework for the operations”.

This would seem to set the scene for a financial cryptographic cold war that may even lead to nations purchasing strategic reserves of bitcoin, as a hedge against attacks on their own permissioned cryptographic currencies.

But Is the Target Really You and Your Financial Privacy?

locks privacy IRS CoinbaseWhile these events will play out in the coming years, countries like Australia continue to move down the path towards banning cash. This is a dystopian development that governments will try to implement before a future financial crisis exposes their lack of revenues, and the underfunded state of many pension funds and social security type programs.

An example also comes out of Australia, where the government recently set up a “black economy taskforce” designed to identify areas in which citizens were minimizing their tax — and ways the government could claw back monies it decides are owed to it.

Limiting cash payments and banning high denomination bills are two such areas, with thought being given to limiting the amount of cash that can be transacted. One article stated:

“The anonymity of cash is exploited by black economy participants and those engaged in illegal activity including money laundering, terrorism financing and illicit trade … While an outright ban [of $100 bills] is unlikely to be effective, an organized changeover (requiring all holders of $100s to exchange them for new ones) might be considered. A possible option might be to use tracking technology for a subset of these notes.”

It is important to note that this is coming from a government who has refused to conduct a Royal Commission into banking practices, even after Australia’s largest bank was caught money laundering and engaging in terrorist financing, by way of exploitable money transfer processes.

Ironically, global bank UBS suggested the use of “outdated” $100 and $50 bills was the “root of the problem” and was to blame in this instance — rather than the Commonwealth Bank itself for prioritizing profit and efficiency gains over security.

Despite this, the report instead suggested focusing on so-called “high risk” sectors: “building and construction, restaurants and cafes, hair and beauty salons, child care, disability services, aged care, labor hire, horticulture and abattoirs, and offshore wagering.”

Tax Authorities May ‘Scrape’ Internet Traffic for Clues

If that were not enough, the report also mentioned using biometric data and snooping on citizens’ Internet traffic. It said:

“Biometrics such as fingerprints, palm prints, iris and facial structure are unique physical attributes that can be used for identity verification purposes … subject to privacy protections … Internet ‘scraping’ technology [can] monitor Internet traffic to identify potentially high-risk transactions. This information is shared with the tax authorities and also Internet businesses (including eBay).”

As is the case with impingements upon privacy and the rights of the public, these measures are thrown into public discussion and left to be absorbed by the masses. The initial reaction is usually outrage — which subsides over time — as the population gets used to the idea and the mainstream media promotes the changes as non-invasive and good for the community.

Like a slow motion bullet, that is how the future arrives.

Will cryptocurrency technology save or enslave people? Let’s hear your opinions.

Images via Pixabay

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