New York Has Tried to Kill off Cryptocurrencies—We Shouldn’t Let Them
Embracing the Future of Transactions
By Dan Smith
Most people don’t know much about cryptocurrencies. They know even less about blockchain.
But a lot of people have heard about Bitcoin—it’s that computer money that made some geeks multimillionaires in 2017, but then its price came way back down. And, sadly, to many that proves it was all just a bubble (and must be controlled by our government).
Many hear “cryptocurrency” and that sounds scary to them. They may have heard that Bitcoin bankers went to jail for helping drug dealers to do business on the Silk Road on the “dark web.”
Why so scared of “crypt”-o-currencies? . . . muh-ha-ha-ah
There are grains of truth to the popular stories out there, but much is also quite false. And there are plenty of facts left out of those stories—often the key parts. Much of what the media, the unknowledgeable and those who favor the status quo are pushing is that we must run to our mommies and daddies: politicians and bureaucrats, to protect our fellow man and therefore the economy.
These sketchy criticisms are never clear as to how new technologies will wreck our economy. Perhaps they’re suggesting Arnold Schwarzenegger will rise with the machines to terminate us all. Facts and your freedom don’t matter much to those who push such narratives—they just insist that you be afraid and let the “experts” stop or regulate this thing so it’s “safe.”
No, the Terminator is not coming for you.
The wild price swings are real. Some of it is because there a few new cryptocurrency offerings and bankers which are weak or frauds, as happens in any new industry. But the swings are largely driven by government action. If you look at the recent quick price drops, they coincided exactly with: China’s announcement that they were shutting down certain cryptocurrency activity, then South Korea announced its plans to prohibit cryptocurrency, and then the US Senate’s announcement it would hold hearings on cryptocurrencies. Each of these led to a separate quick, big fall. But then the price bounced back quite a bit when Korea reversed its plans and then again even more when congressional hearings gave us the news that the US has no plans to stop Bitcoin and many existing cryptocurrencies.
Ask yourself: wouldn’t the value of the US dollar tumble if China or South Korea declared they were outlawing it?
So it’s important to understand WHY governments are looking to prohibit, limit or heavily regulate cryptocurrency activity.
But let’s back up. I apologize, but I feel must give you a bit of explanation about cryptocurrency. I’ll spare you the long explanation and just give you the medium-length explanation (there is no short one). Suffice to say that Bitcoin and other cryptocurrencies are just new forms of money, digital money, that people can use to buy goods and services if they agree to it. And that’s the key—people agree to trade in the currency, just like they do with dollars. No one is forcing anyone to do it.
In a sense, neither dollars nor cryptocurrencies are “backed” by anything—not gold or anything tangible. Technically, dollars are backed by the United States government: it can force its citizens to give you their assets—homes, cars, food, etc. (as if that’s a good thing, but I digress). Cryptocurrencies have no such “guarantee.” But the US government can also decide to “print” unlimited amounts of dollars for whatever reason it wishes, while that can’t happen with cryptocurrencies. At any time, there is a known quantity out there of each cryptocurrency, no more and no less. The US government has a board of appointed bureaucrats which decide how many dollars to create or destroy, based on their economic views, and also based on their personal and political biases. Sadly, those views have proven to be destructive many times—very destructive.
There’s also this: no one knows exactly how many dollars are out there or where they are—literally no one knows. Bureaucrats guess how many dollars exist. With cryptocurrencies, everyone knows when every transaction happens. That’s what the “blockchain” is. It’s a record of every transaction going back to the beginning of time. And everyone who trades in the currency has that ledger (hence why it’s said to be, “decentralized”).
Blockchain eliminates middlemen but at the same time provides more security. If I trade Bitcoin with you, it’s directly you to me. Everyone knows it, as the transaction is verified and tracked—by everyone. That eliminates the need for a payment processor and commercial bank on each side, as well as a central bank (in the US: the federal reserve system). And it means the transaction could be instantaneous—no waiting a week for a check to clear, or a day or two for a wire transfer. But it’s also anonymous—no one asks your real identity. Everyone can see the transaction, but they don’t know who you or I are, which makes it appealing to those of us who don’t like Big Brother watching (yes, including drug dealers—who also still feel quite comfortable dealing in US cash for 99+% of their transactions). The US government has been working hard for decades trying to remove your privacy from dollar transactions—they want to watch all that you’re doing and the Supreme Court says they can—for the reason that you chose to put your money in the bank and can expect no privacy. With cryptocurrency to you can expect and you get privacy from Big Brother’s eye.
The Supreme Court says that putting money in the bank means no privacy for you.
Best of all, blockchain can be used for much more than money. It could be used for shares of stock, other securities, intellectual property, real estate titles, contracts and much more. As happens too often, at any point in time multiple people say they own the same share of stock, bond or dollar because of these delays. It happens all the time, and it’s costly. Blockchain eliminates this problem and has the potential for eliminating the need for bankers, stockbrokers, real estate agents, lawyers and many other costly middlemen.
The media and pundits and politicians and big bankers have tried to sell the public on scare tactics, ideas such as: the lack of established middlemen makes cryptocurrencies unsafe, the anonymity makes it a tool for terrorists or drug dealers, that the use of cryptocurrencies can bring down our economy because of the wild price swings. But they’re goal is not to protect you, it is to maintain their grip on power, which means maintaining the status quo.
And to preserve the status quo, men of power always wish to destroy innovation . . . and with it, destroy future prosperity.
Like so many areas of life, New York state has been most active in trying to protect the status quo. In 2015, under governor Andrew Cuomo, New York instituted the nation’s toughest regulations and licensure laws when it comes to cryptocurrency. To perform many activities with or related to cryptocurrency, you have to submit to many traditional banking regulations—rules which only big banks can afford to follow. Oh, and of course there are thousands of dollars in fees (let’s be honest, it’s a tax)—just in case any startup entrepreneurs were thinking of starting a cryptocurrency business in New York.
It’s no coincidence that New York is also the nation’s banking capital—for both traditional banks and Wall Street. Bureaucrats and their cronies on Wall Street don’t want change. And if change is coming, they want to control it (to profit from it, of course).
As a result of these prohibitive rules and fees (taxes), many cryptocurrency firms have fled New York. Others have seen their license applications lost, delayed or rejected. Think of all the jobs lost in New York. Now consider the potential jobs that will never be in New York. They are just a portion of the millions of jobs lost and citizens who’ve fled New York under Andrew Cuomo’s reign.
Larry Sharpe, candidate for New York governor in 2018 is embracing cryptocurrencies and blockchain, among his many other freedom-forward policies. He wants to eliminate the rules New York has set up. He describes his plans during his recent interview with Dennis Consorte of Cryptosumer.
For fun, Sharpe has even set up his own cryptocurrency, Sharpecoin—a no-value coin which supporters can collect and trade. It’s only stated value is to trade for campaign merchandise or events. But its symbolic value is to demonstrate Sharpe’s belief in the freedom to innovate and put a stop to bureaucrats and their cronies who are looking to rob citizens with their corrupt and prosperity-killing rules and taxes.
I don’t know whether Bitcoin, blockchain or other cryptocurrencies are going to be big in the future. That’s up to the market. They’ve had their share of early problems. But I do know that our politicians shouldn’t be trying to thwart those of us trying to find a more prosperous future through innovation. Many will fail as they experiment. That’s okay. Thomas Edison failed at making a lightbulb a thousand of times. He even set a few fires along the way. That was okay, too. But we got the lightbulb.
Don’t let politicians prevent the next lightbulb.