Sky is Falling (Again) According to American Banker

In an article titled “The Last Straw For Bitcoin”  the author spends 2 whole pages describing why in his opinion Bitcoin has already been dealt a death blow. They make two, actually make that three, of the most common and also the most absurd presumptions that have been circulating regarding Bitcoin lately. 

1) There is no attack on Bitcoin’s anonymity  

Just because FinCen is going to make business like Coinbase and CampBx and others register and comply doesn’t mean impact to Bitcoin’s anonymity. Person to person transactions are still going to be unaffected by FinCen. I actually find it difficult to understand how American Banker cannot even grasp the basic notion that cash transactions are no different in this regard. Perhaps they are still in denial.   

2) Bitcoin Transaction Irrevocability is NOT a deal breaker

It is well known that Bitcoin transactions cannot be reversed. This is a deliberate feature not a flaw of the system. The mantra “All Sales Final” has been around for hundreds if not thousands of years. If some traders sold some furs on the shores of Sicily and then moved on to peddle their wares in Genoa its safe to say there was no return policy on those buyers in Sicily. This trend continues in modern day, people exchange goods in private transactions often facilitated by craigslist ads and there is no expectation those transaction are reversible.  As an additional control though even a Bitcoin merchant wants to extract Fiat from their Bitcoin they will need to incorporate a traditional financial institution in the same way a cash business will at some point want to take their under the mattress stash over to a bank. At which point the funds could be subject to the revocation. I don’t think there is any argument here that Irrevocability isn’t also built into cash businesses so why is American Banker pretending this is a deal breaker? Again ….perhaps deep denial

3) Bitcoin unrelated to Liberty Reserve

This one keeps popping up all over the place that the notion that the Feds shut down Liberty Reserve is an ominous sign for Bitcoin. This couldn’t be further from the truth. LIberty reserve was undeniably involved in “money laundering” for years tallying in the billions. Unlike Bitcoin, Liberty Reserve was a single entity and was a centralized service. Chopping off the head kills the body.

Bitcoin is not susceptible to these kinds of shutdowns due to it inherent distributed network model. The government trying to take out Bitcoin wholesale would be about as successful as the RIAA and MPAA wiping out digital piracy of movies and music. What is susceptible are exchanges that do not want to comply with FInCen. They will certainly face the possibility of closure but to imply Bitcoin could be shut down wholesale is a demonstration of how naive American Banker is in regards to bitcoin.

In conclusion be on the look out for these and other fallacies about bitcoin that continue to be propagated on the internet. Mainly from status quo fiat banker websites that are terrified they’ve just been made obsolete.   

 

Leave a Reply