Wednesday, June 11, 2014
Ever since the venture capital scene started talking about Bitcoin back in 2013, one of the most frequently cited comments from them is that Bitcoin is interesting for the technology, not the currency. In fact, this mantra has become so common that it almost sounds… scripted.
What’s going on here?
Apparently millions of Bitcoin users around the globe never got the word that Bitcoin isn’t interesting as a currency. If Bitcoin wasn’t interesting as a currency, then why would the banking system need to go to such lengths to slow down the capital flight from the Dollar to Bitcoin by enacting restrictive Choke Point restrictions on both regular businesses and P2P trading?
The answer lies with the fate of the US Dollar. All government currencies have a finite life cycle, with an average lifespan of 27 years. The USD has lasted longer than most, but it will not be an exception. However, whether you’re talking about the Weimar Germany, or Argentina, or the USSR, or the USA, the death of a currency follows an known script. The most important part of this script is that the connected elites get out first and leave the rest of the population to be the bagholders.
The problem with Bitcoin is that goes off-script. The hoi polloi got into Bitcoin before the elites got into it, and Bitcoin contains none of the mechanisms via which they normally arbitrarily inflate the currency to enrich themselves. This is a problem if you’re part of the modern financial aristocracy. Something Must Be Done.