I’m finishing up a novel, a piece of speculative fiction in a genre you could call “economic-thriller”.
|The Mark of the Beast?|
In the book, the dollar crashes in a hyperinflationary fire (natch), replaced by a new currency called the american. The exchange rate at the time of the changeover is $1,000 equals ₳1. To illustrate its purchasing power, ₳1 buys you a candy bar.
However, americans don’t exist as physical currency. There are no “american bills” like there are dollar bills, and no coins either. Instead, americans are a fully digital currency: They exist in the ether. You need a card—be it a credit card, debit card, or EBT card—to spend americans. And to receive americans, either from employers, customers, government, etc., you need a “central account” which is tethered to your Social Security number.
The rationale for these measures is convenience—but the implication is, no one can earn, save or spend money without the government being aware of exactly what you are doing.
Since the government can easily access all your spending and earning of americans, no one can launder money, or evade taxes, or even so much as fail to pay all their bills on time. Law-makers and politicians and pundits say it’s no big deal that the government will know everything about the citizen’s finances, because, “If you’re not doing anything wrong, you’ve got nothing to hide! If you’re paying all your bills and your taxes and your loans, you got nothing to worry about!”
Another feature of this virtual currency: With americans, you can never again be late with your bills. Payments you have to make are automatically deducted from your central account. And if you take out a loan for whatever purpose, not only is that information in your central account, but your ability to spend money is automatically prioritized: Taxes get paid first, followed by private loans, then bills, then food, then “etc.”
In the novel, law-makers use this compulsory “compliance” as a selling point for the american. “Think of the convenience! No more worrying about paying your bills—your bills are all paid for you!”
However, if you don’t have enough money for “etc.”—entertainment, booze, an ice-cream sundae with the kids, what have you—you don’t get any. And if after paying off your loans and bills there isn’t enough left over for food—then no food for you. Ditto with bills: No money for electricity, or water, or heat? Then no electricity, or water, or heat for you. And if perchance you can’t fully pay off your loans, then you are declared in “non-compliance”. And if you can’t pay off your taxes, then you are charged as being in “criminal non-compliance”—and then woe is you.
In the language of the novel, it is a “fully-compliant currency”—and it forces the people to be “fully-compliant citizens” of the dictates of the government and the banksters.
This is of course a fiction I invented for my upcoming novel—but I couldn’t help notice how lawmakers and banks are all of a sudden getting on the bitcoin bandwagon.
For something that was supposed to be a threat to the established order, which is what bitcoin and the other cryptocurrencies promised to be, the established order sure seems to be happy with it: The U.S. Senate hearings on bitcoins were pretty much of a success for bitcoins, and banks are starting to throw nothing but love in bitcoin’s direction. The mainstream media isn’t putting down bitcoins, as it did a few years back.
In short, and unlike what a lot of cryptocurrency proselytizers have been saying—that the powers that be would be against bitcoins—the establishment seems to be fully in favor—or at least accepting—of bitcoins.
Makes you go Hmm . . ., now doesn’t it?
Me, I’ve already explained here and here why I think that bitcoins are in a bubble, and why bitcoins and other cryptocurrencies will never be currencies per se, only an asset class. My thinking is, cryptocurrencies represent a new class of assets whose value is highly unstable so long as they are not actually tethered to some good or service people both need to buy and have to sell. Until that day happens, cryptocurrencies are nothing but speculative investments that can plummet to zero at a moment’s notice.
However, thinking about cryptocurrencies from the point of view of the Federal Reserve, or a senator on the Banking Committee, or a trader at a bank’s prop desk, cryptocurrencies such as bitcoin have a lot of advantages—they’re not something to be dismissed out of hand.
All of bitcoin’s benefits to the establishment revolve around its blockchain.
In simple terms, a blockchain is a registry of all transactions carried out in bitcoins. Thus is resolved the problem of double-spending one particular bitcoin: It can’t be done (at least in theory) due to the blockchain.
But the blockchain is in fact a register—a trail—of bitcoins. So it’s a relative cinch to piece together each and every transaction of any particular wallet in the bitcoin universe. And since exchanges need detailed personal information about a bitcoin user in order to comply with money-laundering laws before issuing a new user with a wallet, the government or other interested parties could determine what any one particular person has been doing in the bitcoin marketplace.
In other words: Imagine that the government knew each and every cent you earned and spent, without a single exception.
That cannot be done with dollars, at least not easily. The dollar’s inefficiencies when compared to bitcoin or any other cryptocurrency are exactly what make tracking dollar transactions so hard. That’s why money-laundering in fact exists: Criminals are taking advantage of inefficiencies in the dollar to hide their profits and thus not get caught.
But with bitcoins as they currently exist, it is a snap to keep people compliant. Once some simple baseline limitations are imposed on users of bitcoins—such as the rules implemented by exchanges so as to comply with money-laundering laws—a user’s transactions are as transparent as glass.
Which is what a government would want, in order to get every bit of tax revenue it wants. Which is what a bank would want, in order to properly gauge the risk of a loan it is extending, and thereby maximize its profits.
Not only that, being able to track people’s spending completely, in real time, as can be done with bitcoin and conceivably every cryptocurrency, the government could easily rescind someone’s ability to earn money.
Witness how the government shut off WikiLeaks’ source of funding—took them less than a week. WikiLeaks depended exclusively on donations made via credit card payments—so by “encouraging” the credit card companies, Visa and Mastercard, to refuse to process donations to the organization, the U.S. government shut down Wikileaks just days after the first big document leaks of 2010.
With bitcoin or some similar cryptocurrency, the government wouldn’t even need to take the step of contacting credi card companies to “encourage them to do the right thing”: The government could simply make any payment to a targeted group invalid. (And perhaps get a notice of whoever it was who donated to the targeted group?)
All this is to say, bitcoins and other cryptocurrencies are potentially a great step forward for a government looking to impose a Panopticon society on the American people. We can’t travel without TSA’s approval, so why not extend that power to people’s ability to interact in the economy as well? Due to the fact that, with bitcoins, there is a trail from people to their bitcoin wallet to their bitcoin usage, a trail that is relatively easy to read, the government could have this power over each and every citizen—the power to monitor and control our interactions with the economy.
Which is why bitcoin—far from being a threat—might just prove to be the fully-compliant currency the U.S. government can come to love. A currency that will let it have unfettered access to each and every financial transaction you carry out.
Is that something that we as a people want? More power to the government? Because that’s the promise of bitcoin.
via Gonzalo Lira