Is the US Government Working to Ban Anonymous Crypto Usage?
A number of U.S. government officials in high positions — including the President — claimed recently that cryptocurrency is not a good way to pay for goods and services. While some analysts say this stopped a 2019 bull run in its tracks, is it true these words actually have a significant impact on digital asset prices?
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Trump Aims at Crypto, Ignores Dollar
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….
— Donald J. Trump (@realDonaldTrump) July 12, 2019
Despite Trump’s rough approach, he actually makes good PR for cryptocurrencies. It is the same thing that happened to the Bitcoin SV (BSV) price some time after Binance CEO “CZ” started that coin’s “delisting drama” and several BTC maximalists like Anthony Pompliano gave him unexpected support. Instead of going to zero, BSV jumped from ~$50 to ~$220 USD per coin in two days.
Looking at his tweets, we may presume President Trump is afraid of Facebook’s potential to bite off a piece of the U.S. dollar’s value proposition, in terms of its position as world reserve currency and international payment method. Additionally, he may not completely understand that Libra is not a cryptocurrency.
That is because it will have zero anonymity and privacy, and requires KYC, centralized nodes and other attributes that don’t comply with crypto standards. Libra may also be an attempt to cover the “Facebook Dollar” under “crypto” skin and bring it to life without regulation. Then, it will collect more data about people worldwide and sell it.
Fed Chair Invokes the ‘Virtual Gold’ Trope to Slam BTC
United States Federal Reserve chairman Jerome H. Powell was also recently asked about bitcoin:
The Chairman of United States central bank when asked about Bitcoin:
"They use it as a store of value…like Gold….that's not to say we won't see it & if we do see it yes you could see a return to an era in the US when we had many different currencies…"
— Luke Martin (@VentureCoinist) July 11, 2019
While answering, he was very self-confident and made an impression he knows cryptocurrency basics very well. Particularly, Powell said that people in the Bitcoin sphere use it as a store of value and alternative to gold, but its adoption rate is too low to consider it a serious payment method.
His facial expressions showed he was not in an awkward situation and answered with a notable level of felicity. He also noted that the U.S. may return to another “multicurrency” era.
Interestingly, he is right about bitcoin turning itself into virtual gold, not cash. Despite the fact Satoshi Nakamoto described bitcoin as digital peer-to-peer cash, BTC often now transacts as slow as gold, and it has become a system where you sometimes need to pay huge fees to move coins and wait for three days — when not using third parties like exchanges or crypto funds.
Exchanges, funds and multi-signature wallets already work for years as a relatively secure off-chain payment method. Strangely, Blockstream developers spent their time creating brand new off-chain layers instead of improving current exchanges with a new level of transparency software.
Let us imagine someone had asked Jerome H. Powell about Bitcoin Cash (BCH). What would be his answer? The “gold” reference becomes unacceptable.
Steven Mnuchin Continues Government Campaign
In another recent speech, 77th U.S. Secretary of the Treasury Steven Mnuchin declared that cryptocurrencies are used in illegal activity. However, even ISIS prefers USD over cryptos, and they often confiscate all the bills when they find them in captured banks, despite they have an order to burn anything related to western culture.
Mnuchin went on to blame cryptos for darknet markets’ operations. In fact, many of the sellers use alternative payment methods for the drug business. But in many countries, there are online fiat payment solutions that do not require passing KYC to open an account. Such ‘solutions’ avoid any regulatory control, and have no public disclosure or extensive advertising of their services. You can find this on their official websites, such “payment processors” covered by some banks or even government corporations.
Darknet vendors (as well as people who use Telegram to sell drugs) want to maximize their audience, so they simply choose “old school” payment methods over complicated cryptocurrencies. That’s perhaps because drug addicts don’t want to learn how to use cryptocurrencies or are afraid they won’t be able to chargeback… or even because they are too stupid to use crypto.
Mnuchin claimed that it’s OK if you want to speculate on the crypto prices, despite the main goal of cryptos being (in terms of the ideology from which they were born) to eliminate the need for market speculation and for fiat currencies in general.
Furthermore, Mnuchin brought in the “level playing field” rule, despite bank employees never getting two life terms in prison for being intermediaries between criminals and their clients, like Ross Ulbricht did. If he and the government want the rules to be fair for everyone, corrupt bankers should receive two life terms for any kind of crime, whether it was performed by their management, clients or partners.
Crypto vs. LSD: 10 Years of Freedom, Time to Ban?
Let’s think about the history of LSD in America. After it was discovered by Albert Hoffman, it was legal for 10 years and anyone was able to buy LSD made by SANDOZ corporation, in a drugstore.
It was used in psycho-therapeutics by many scientists and doctors like Timothy Leary, to change the personal traits of criminals. Such practice used to give positive results. Up to 90 percent of Leary’s patients who had engaged in criminal activity never went back to prison after participating in his experimental treatment programs.
LSD also inspired hippy culture in the 1960s (the Beatles, etc.) which made many young men refuse to go to war, support politics or pay taxes. Since the government demands its soldiers leave their safe society to become killing machines, the authorities decided to put the drug out of bounds to protect the U.S. military from unwanted effects, and eventually atrophy.
The now increasing rage of government officials against cryptocurrencies feels like the history is repeating itself: when the government feels that something is threatening its established matrix, it puts that thing outside the law.
Privacy for BCH, XMR, ZEC, and KYC for BTC, ETH, Libra
Bitcoin may become a tool that will only allow transacting after users pass a KYC procedure — and after that, only for trading or money transmitting. Since Bitcoin Core devs do little to nothing to increase the system’s anonymity and fungibility of coins, BTC is becoming more and more traceable. And the industry’s key companies keep betraying users to collect and dump personal data and traders’ behavioral analysis to invisible players.
One bright example is LocalBitcoins, one of the most popular services for trading BTC in a P2P manner. It has now closed the possibility to create deals that allow the exchange of bitcoins to fiat in person.
It also introduced a multi-level KYC/AML system for traders to dump personal data to the Jumio service. This is used by several other crypto companies to approve KYC documents received from the clients. Almost all major exchanges in the space do the same, while users don’t even know how exchanges and third parties like Jumio are using huge amounts of gathered personal data.
Time to Switch Away From Bitcoin?
In light of these facts, cryptocurrencies like Bitcoin Cash, Monero, Zcash or MFCoin may become secure, stable and reliable anonymous alternatives to Bitcoin.
One more good reason to switch away from BTC is that the developers of Bitcoin Cash, Zcash and Monero didn’t receive any investments from Tether Reserve — which appears to have surprisingly high influence over Blockstream employees and the Bitcoin ecosystem in general.
Will the U.S. government’s old school rhetoric and public messages trip up Bitcoin? Or will they continue using sophisticated methods like Tether’s endless USDT printing? Share your opinions in the comments below.
Images by Jeff Fawkes, Alex Grey, Google, Pixabay