Yesterday I posted that while I thought BTC was at the lower end of the range at $650, there was the potential for some near-term headline risk. I thought that it might come from the U.S. banking system, but instead it came from China when they banned new renminbi deposits into the leading global exchange BTC China. While I am not saying that the price will now quickly launch to new highs, there was complete and total panic in the air last night. No question about that. In addition I tweeted that:
Now I think we have a much more positive setup going forward, although a similar period of consolidation such as we saw earlier in this year is likely. The news out of China cannot get any worse, and BTC China as far as an exchange and price discovery mechanism is basically dead. The big risk now is that other nations take similar actions, but the sentiment is now sufficiently bad and people expect bad news. Last night represented the most BTC I have bought since the spring crash.
In light of all this, a reader of my blog going by the handle Anon Wibble posted an excellent comment and I have decided to republish it here. Would love to get reader feedback as well. Enjoy!
Bitcoin will prevail. This isn’t just another e-currency, this is an entire framework for communicating information and money unlike no other ever before. This is the biggest revolution since linux and the more you use bitcoin the better and more complex you realise it is.
Look at the following things:
1) bitcoin can do everything a bank can do
2) while it’s true that unlike credit cards, btc has no way to chargeback claims, also consider that in the past chargeback scams have defrauded business through payers likes paypal etc. Chargeback doesn’t prevent fraud at all, it moves the person being defrauded from one person to another. Also consider that escrow services do chargeback for far cheaper than credit cards do.
3) bitcoin isn’t just a currency it’s a protocol that can be used to exchange information, nowhere in the headlines is this even mentioned files and information can be exchanged through bitcoin nobody has even looked at this yet
4) JPMorgan wouldn’t have tried to patent their own version of bitcoin 170 times, if they didn’t think crypto currency wasn’t the future
5) Russians wouldn’t have coprighted the bitcoin logo if there wasn’t money in it
6) The government may well attempt to block bitcoin, and attack it by using rival crypto currencies to attempt to dilute the impact, however this will NOT work because bitcoin protocols can be upgraded.
7) The government may well try and block the bitcoin protocol using port block and active packet inspection systems like ingress and egress, however, again, this will NOT work because bitcoin can upgrade it’s protocol. In the worst possible scenerio some way to block it will be found within a country. When that happens you can use dark web like TOR and proxies to bypass this censorship.
8) Bitcoin IS backed by tangibles. You can buy things with bitcoin you can’t buy with ANY other currencies on the dark web. Despite what mainstream media says this will continue to provide bitcoin with liquidity. Just stop and think about this for a second, what is more valuable, something that can be exchanged for drugs or gold you have to take down to a pawnbroker ? Which is easier to exchange?
9) Bitcoin just needs to get to a critical mass where a few companies provide all items you need to purchase to survive, as soon as that happens, bitcoin will be self sufficient and these companies will be able to keep btc off balance sheet where they will not be obliged to pay taxes, this is as big of an incentive as any for a seller. When this happens, there will be an entire ecosystem of commerce which is not answerable to the government. Furthermore there is NOTHING the government can do about it. When this happens, the government will be cut off from their taxes and will no longer have the credit rating to finance institutions that censor free speech and there WILL be a revolution. Currently over 22,000 companies accept bitcoin, and that number is increasing every day!
10) Bitcoin can only fail for either of two reasons: a) a rival crypto currency offers better features b) all of the dark web is closed down which is the source of bitcoin’s liquidity / or the government somehow censors it
Addressing these points in order: a) will not occur because btc is an upgradable protocol and if such a thing occurs, or a flaw in btc is found, the protocol will upgrade overnight. b) Given that after 4-5 years the government is _still_ trying to shut down pirate bay in the lightweb – and they are still failing, likewise with wikileaks. In the dark web only one of 200+ dark websites they managed to close down was SR, and that was only because the feds got lucky, and busted some guy stupidly ordering fake passports over the net. NSA cannot crack RSA encryption, if they could, why would they be installing backdoors into everything they can? Think about this logically for a second. RSA / SSL is something that US intelligence use to secure their data, would they use it if it was compromised?
In summary, the best the government will be able to do is try and scare people off bitcoin using newspapers like someone trying to scare flies of a cowpat, and everytime the flies will return and there’s nothing they can do about this. When bitcoin comes of age, it will be the most amazing financial revolution the world has ever seen, which will be as significant and as influential as Unix was to computing.
In Liberty,
Mike
Source
X art by WB7
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