In Bitcoin’s truly trustless system of financial accountability, there is no need for regulation. Because of this, there really is no need to regulate the remainder of the cryptocurrency market either. Consumers hate nothing more than being scammed. As altcoin fads come and go, it becomes apparent that bitcoin has staying power and investors will eventually stop supporting failing, unstable and pseudo-decentralized coins. If there is anything that we have learned over the past two months, it is that Bitcoin is the model for laissez-faire capitalism operating in a self-regulated system.
It is very dangerous to seek the government as the ultimate solution to problems that exist in a free market. Especially when issues were caused by a product’s poor durability responding to bad market management by those same regulators.
The issue with additional regulation of cryptocurrency exchanges is that the government would acquire more tailored control of the market and limit financial freedom. This effect is especially potent as bitcoin integrates with the market by becoming a payment option for the average consumer. Businesses, not bitcoin, will become the target as few of them would be willing to risk the consequences for defying government overreach.
Bitcoin is designed to be the escape hatch from the federal government’s poor management of the market. At present, historic inflation is making ordinary activities like driving to work and eating three square meals a day practically cost-prohibitive. Meanwhile, the Federal Reserve is dangerously close to overcorrecting the situation, threatening to send the economy into a recession that could rival what we experienced in 2008. Given this track record, it would be unwise to grant the present stewards of the American economy any control of people’s access to their only means of escape.
Though the Lummis-Gillibrand bill is a start to clarifying the law and recognizing bitcoin as a viable store of value, there needs to be provisions that protect the industry from the regulators themselves. There should be protections that recognize your right to own and keep your bitcoin, limit the latitude executive agencies have when interpreting their role within the regulatory framework, and recognize one’s right to financial privacy as guaranteed by the fourth amendment of the U.S. Constitution. Regulating the regulators would limit overreach and support the rights to financial privacy and property in their most perfect form.
One should remember that bitcoin is not intended to be an ordinary investment, but a movement built on the principle that financial freedom should be accessible to all and absent market manipulation by any government, company, group or individual. Investors voluntarily calling for the restriction of this right are holding bitcoin for the wrong reasons and entirely miss the point of this grand experiment.
Bitcoiners must not only HODL their bitcoin on the basis of their belief that it is a superior store of value. They must also apply this principle to the sphere of public policy: “Politically HODLing” on the basis that bitcoin requires no regulation as the superior trustless system it is. It is important to both support public policies that clarify the law, encourage innovation and open the market, while opposing those that create inroads for bureaucrats to regulate at will. Without this political vigilance, Bitcoiners are in danger of losing the culture war between the Fed and true financial liberty.
This is a guest post by Niklas Kleinworth . Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.